A DISCUSSION OF THE CHICAGO INSURANCE COMPANY LAWYER PROFESSIONAL LIABILITY COVERAGE

TO ALL INTERESTED AND IMPACTED MEMBERS OF THE NEW YORK STATE BAR, ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK, NASSAU COUNTY BAR AND BOSTON BAR ASSOCIATIONS

There are two overriding and compelling reasons not to switch carriers if you presently are insured for legal malpractice with Chicago Insurance Company. Indeed, the seemingly innocuous act of changing legal professional liability carriers poses hidden dangers and could have a devastating impact on the economic status of your clients and perhaps the viability of their firm. In this climate you must ensure that your client is fully protected and only continuity of coverage with Chicago Insurance Company provides this degree of certainty for you and your lawyer client.

The first substantive reason you should not switch professional liability carriers is due to the fact that the mere act of switching coverage creates a “gap”. This “gap” could result in the old carrier denying coverage on a “claims made and reported” basis. The rationale for this is based on the fact that while the circumstances giving rise to the claim took place during the policy, if you no longer maintain coverage with that carrier, they have no obligation to you. The new carrier would also have a valid denial of coverage based on the fact that you should have “reasonably” known of this claim before you obtained your coverage with them. Thus, you would find yourself without coverage for any claim or claims which arise in this manner. The situation described herein is referred to as “continuous coverage” within the industry and maintaining this continuity is a vital aspect of ensuring you have ongoing and uninterrupted protection. Two cases which graphically illustrate the disastrous impact to law firms which were “caught in the coverage gap” are Ingalsbe v. Chicago Insurance Company, 270 A.D. 2d 684; 704 NYS2d 697; 2000 NY App. Div. LEXIS 2906 and Fogelson v. Home Insurance Company and American Home Assurance Company, 120 A.D. 2d, 514 NYS2d 346; 1987 NY App. Div. Lexis 45186.

The second substantive reason that you should not change your coverage is based on the fact that many policies (including the newly endorsed carrier – Zurich) do not cover you for potential claims which were concealed from you by an employee. The Chicago product has and will continue to cover this situation. As such, if you choose to switch your coverage to Zurich and an employee (or even a former employee of your firm) who may be concerned with adverse consequences within your firm does not advise you of a possible claim when he/she is aware, you will be without coverage for such a situation. This is known in the industry as “sleep insurance” and is an essential aspect of your professional liability insurance that any reasonable practitioner would insist on.

There are other benefits of the CIC coverage as compared with the newly endorsed carrier (Zurich NA). For instance the CIC form includes a liberalization clause, supplementary payment provisions, a greater degree of protection relative to the erosion of limits as set within NYSDOI Regulation 107, free tail coverage for retirees (under certain circumstances) and protection for “of counsel” situations.

The Chicago Insurance Company has been writing legal malpractice coverage throughout the United States since 1995. Chicago Insurance Company is a subsidiary of Fireman’s Fund Insurance Company, which is owned and fully supported by Allianz. As you may know, Allianz is one of the two largest insurers/financial institutions in the world. The organization maintains an “A” (excellent) rating from AM Best which is an enviable and desirable distinction in view of the present business environment and given the unique challenges now faced in general by the insurance industry.

The Chicago Insurance Company continues its history of uncompromised product quality and superior claim service to the lawyers in the Northeast despite the fact that it is no longer the endorsed carrier. In fact, it will continue to maintain a claim staff in the Northeast which is has developed and staffed with skilled professionals over the past 8 years. These dedicated professionals understand the needs of lawyers providing the highest level of discreet and professional assistance when a claim is made.