The Advisory: Volume 9, Issue 1, March 2011
Need for Excess Insurance?
By Lisa Sabo, Director, Insurance, Law Society of Alberta
AS THE VALUE of client matters and transactions increase, so too does the need to secure adequate levels of errors and omissions insurance.
In an ideal world, each law firm will regularly assess their risk tolerance and secure amounts (“limits”) of coverage appropriate to the size of the firm, and level of exposures faced from client work. However, sometimes a client will ask for proof of insurance, or require a transaction beyond the current limits of insurance that the firm carries, and a sudden and urgent need for insurance presents itself.
The first question that should be asked in such a situation is: “Does this make sense for my practice?” Often a sudden need for large amounts of excess insurance will be due to a transaction or new client that does not fit within the normal scope of practice for the firm. Sometimes the best course of action is a referral. For example, if the transaction in question is a large real estate transaction that a lawyer is doing as a one-off.
If excess insurance is required, the Canadian Lawyers Insurance Association’s (CLIA) Voluntary Excess Program (VEP) is available to Alberta firms, and has been protecting subscribing firms in the Alberta legal community for over 20 years. Like most liability policies, the CLIA VEP program is “Claims Made” insurance, meaning that the policy is triggered when a claim is made and not necessarily when the work was done. It is not transactional based coverage. Statutes of limitations provide for a time period in which to present claims, and firms that do not renew their excess policies will not have coverage for losses reported after the expiry date of the policy. As such, coverage purchased out of the need for a single transaction will need to be purchased going forward if the possibility of a claim still exists.
The CLIA VEP program is proud to be a not-for-profit plan designed by lawyers for lawyers, with stable coverage and rates during both “soft” and “hard” market conditions. Firm wide coverage includes partners, employed lawyers, professional corporations, service/management companies, as well as former partners and employed lawyers for services rendered prior to retirement.
Applications are available at www.clia.ca. For more information on the CLIA VEP program, please contact the Alberta Lawyers Insurance Association at 403-229-4716 or toll-free at 800-661-1694.
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