• A.M. Best Financial Rating - The financial rating or an insurance company. Companies are rated from "A++ (Superior)" to "D (Poor)." CLICK HERE to learn more.

• Admitted vs. Non-Admitted Carrier - An insurance company that is “admitted” has been approved by a state’s insurance department. An insurance company that is “non‐admitted” has not been approved by the state’s insurance department.

• Areas of Practice (AOP) - The breakdown of the type of legal work a firm does as determined by the firm's gross billings.

• Carrier - The insurance company that provides coverage in the event of a claim/incident/event.

• Claim - An express, written demand upon an insured for money or services as compensation for civil damages.

• Claim Expenses Outside Limits (CEOL) - This is an optional coverage feature that provides an additional layer of coverage to a policy. For an additional cost, CEOL can be added to a policy to create a separate coverage amount specifically dedicated to claim defense costs (lawyer fees, court fees, etc.).

• Claims-Made Policy - A type of policy that offers coverage for a claim arising from a legal service that not only occurred on or after the retroactive date (as set forth in the Declarations Page of the policy), but also was first made against an insured during the policy period.

• Declarations Page - Issued by a carrier along with the insurance policy, this document states basic information about the policy, including policy period, types of insurance coverage, limits of liability, premiums due and coverage restrictions.

• Deductible - The amount that the policyholder must pay out before the insurance company will provide payment toward claim expenses or an indemnity.

Deductible Type:
• Per Claim Deductible - This is the most common deductible type. The firm must pay the deductible each time a qualifying claim/incident/event occurs. If a quote or policy does not specify otherwise, it is a per claim deductible.
• Aggregate Deductible - Most carriers will provide this optional feature upon request. Once the deductible limit is reached for a given policy period, the firm will not be responsible for any other out-of-pocket expenses related to qualifying claims/incidents/events. An aggregate deductible will increase the premium.

• Endorsement - An amendment added to an existing policy modifying its terms.

• Event - An accident. Typically, all injuries arising from (1) the same or related acts, errors, or omissions or (2) the continuous or repeated exposure to substantially the same errors is considered one event.

• Exclusion - A policy provision setting forth a specific loss or risk the policy does not cover.

• Extended Reporting Endorsement (aka “Tail Coverage”) - Applicable to claims-made policies, this coverage allows the insured to report claims first made after a policy termination date. However, such claims must result from an event that occurred on or after the retroactive date, but prior to the policy termination date. Some carriers waive the additional premium for this coverage in the event of an insured's death, disability or permanent retirement.

• First Dollar Defense (FDD) - This is an optional coverage feature that can be added to a policy for an additional cost. Adding FDD to a policy means that the firm only pays the deductible if they are responsible for an indemnity payout at the end of a claim.

• General Agent - The company that administers the Legal Malpractice Insurance program for one or more carriers. The general agent typically has underwriting authority on behalf of the carrier.

• Incident - An event the insured knows or reasonably should know is likely to result in a claim.

• Indemnity - As used in this informational document, indemnity is generally intended to mean the payments made by an insurance carrier on behalf of its insured to cover loss arising from liability claims for which the insured has become responsible, and for which the insurance policy issued by the carrier provides coverage.

• Insured - The law firm or organization for which coverage is being sought. All attorneys (as long as they have been reported to the carrier) doing legal work on behalf of the law firm or organization will be covered by the policy.

• Lawyers Professional Liability (LPL) - Interchangeable with Legal Malpractice Insurance.

Limits of Liability (Per Claim/Aggregate):
• Per Claim Limit - The Per Claim limit of liability is the maximum amount of coverage available for any single claim/incident/event.
• Aggregate Limit - The Aggregate limit of liability is the maximum amount of coverage available across all claims/incidents/events in a given policy period.

• Premium - This refers to the base annual cost of a Legal Malpractice Insurance policy, before any fees or taxes.

• Retroactive Date (aka Prior Acts Date) - This is the date after which an event must occur to be eligible for coverage under the policy. This is the same date as the effective date of your first policy. If there is a gap in coverage due to a lapse or cancellation, you may lose your firm's Retroactive Date.

The first year you put coverage in place will typically be the lowest price you will ever pay for Legal Malpractice Insurance, assuming you continue to renew every year. Each of the first 6 years that you renew your policy, you can expect to see a moderate (5-10%) increase in the base annual premium. This is due to Step Rating.

The concept of Step Rating is that each year you renew your coverage, there is a higher risk that a claim will be reported to the insurance company. This is due to a number of different factors (more clients, more cases, more time for a client to discover a mistake that was previously made, etc.). Since the insurance company takes on more theoretical risk, they systematically increase the premium to account for it.

After your 6th renewal, your policy will have reached "maturity," meaning that the risk factor will not continue to increase beyond that year. As a result, your annual premium should level off. I emphasize the word "should" because you can still experience increases in premium after the policy reaches maturity for factors such as experiencing claims, changing areas of practice, inflation, insurance company rate increases, etc.

If you feel that your premium has increased too much, our agency would be happy to shop the market to make sure you are getting the best combination of coverage and pricing.

While pricing is always important, it shouldn’t be the only measure by which you judge a Legal Malpractice Insurance quote. When shopping for a policy, it is imperative to take the following factors into account:

• The carrier's A.M. Best Financial Rating - CBA Insurance Agency does not work with any carriers with an A.M. Best rating lower than “A- (Excellent)”.

• Your firm’s Retroactive Date (also referred to as Prior Acts Date) - if your already have coverage in place, make sure that any competing offers include coverage back to your firm’s Retroactive Date, otherwise you may lose coverage for work acts/errors/omissions from the past.

• Additional Policy Features, such as: Claim Expenses Outside Limits (CEOL), First Dollar Defense (FDD), Deductible Type (Per Claim or Aggregate), and any other policy endorsements/exclusions that can change the policy’s terms.

Annual payment via:

• Check - payable to “CBA Insurance Agency.” Mail/Deliver to The Chicago Bar Association - 321 S. Plymouth Court, Chicago, IL 60604

• ACH - electronic transfer from a bank account through a secure payment portal.

• Debit/Credit Card - a 3% processing fee is added to all debit/credit card transactions. Payments processed through a secure payment portal.

Premium Financing is available upon request. Financing is offered through Imperial PFS, a third-party financing company. A variable APR applies. A down payment (via check, ACH, or debit/credit) is due to CBA Insurance Agency to bind coverage, monthly payments are then due to Imperial PFS.