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My firm is contractually obligated to provide full prior acts coverage for one client. If the client discovers an error after the contracting term is completed, can they still make a claim?
State/Country relating to Question: New York Already Tried: Dept of insurance
<p>In the insurance context?</p>
yes
The answer depends on whether the policy in question is a "claims made" policy or an "occurrence" policy. Do you know which one you have? Do you have access to the policy? Perhaps I could walk you through it so we can figure this out. Can you give me an idea of the type of policy? Malpractice policy, error and omissions policy comprehensive general policy?
It is claims made, Professional Liability policy E&O. I do not have the policy. The client wanted us to purchase extended "tail " coverage for three years. We told him that we had full prior acts provision in our policy and could not purchase extended reporting due to the huge premium. The client responded that full prior acts would not benefit him because coverage would end when the service contract ended.
Since it is a claims made policy, only claims made within the specified claims period are covered. A claim is generally defined as a lawsuit, threat of a lawsuit or other notice which reasonably notifies you that such a claim is going to be asserted. Tail coverage is extremely expensive because it enlarges the claims period and therefore increases the exposure for the carrier. I hope this helps. Please let me know if you have additional questions. this is a very complicated area of the law.
Pete
so does that mean we do not have to have an active service agreement with the client for them to make a claim. since we have full prior acts and there is no retro active date, the client would be able to make a claim relating to an error occuring during the time we were in contract with the client.
If the claim period under the policy has expired, then the client does not have coverage. For example, if the claims period is 9-1-2002 to 9-2-2003, and the act of malpractice occurs in October of 2002, but the claim is not made by the plaintiff or claimant until October of 2003, there is no coverage under a claims made policy. The triggering event is when the claim was made, not when the act of malpractice is occurred. Similarly, if the malpractice occurred in October of 2001, but a claim was not made until October of 2002, then the claim would be covered because the claim is made during the policy period. Thus the policy could conceivably provide coverage for malpractice prior to the client even working for you.
This is much different that an occurrence policy like you have on your vehicle. The triggering event on this policy is the accident or negligent act/malpractice.
I hope this helps. Pete
Attorney
19 years of private practice.