Alberta lawyers in private practice are required to participate in the indemnity program, operated by ALIA and provided through the Alberta Lawyers' Professional Liability and Trust Safety Insurance Group Policy (the “Group Policy”). The Group Policy is written by the Alberta Lawyers Insurance Exchange (the “Insurer”).
Coverage under the Group Policy is provided on a “claims made and reported” basis, meaning that coverage is dependant upon when the claim is made and reported to the Insurer (and not when the “Occurrence” (as defined in the Group Policy) has taken place. Note that reporting of claims to the Insurer is done through ALIA using a
New Claim Report
.
Lawyers covered by the Group Policy (“Individual Insureds”) are required to comply with its terms, including the obligation to report any claim or circumstances that might constitute an Occurrence or give rise to a claim, however unmeritorious, to ALIA as soon as they become aware of it. Failure to report a claim or such circumstances (a “potential claim”) on or before the June 30 deadline of the annual Policy term (the “Policy Period”) in which the Individual Insured becomes aware of the claim or potential claim, will result in denied coverage.
It is critical that claims or potential claims are reported as soon as an Individual Insured becomes aware of them, as the Group Policy also provides that once the Policy Period has expired, the Insurer is free from liability if no claim has been made and reported during the Policy Period. The reinsurance that ALIA/ALIEX purchases from third-parties is premised on this requirement.
Part A (Professional Liability Insurance) of the Group Policy contains certain protections for “Additional Insureds” (as defined by the Group Policy), which include present or former partners and/or the Law Firm of the Individual Insured who has caused or is alleged to have caused an Occurrence within the meaning of the Group Policy. These protections are referred to as the “Innocent Additional Insured Provisions”.
The Innocent Additional Insured Provisions protect Additional Insureds in situations where the Individual Insured is denied coverage because of fraud or malice, failure to notify the Insurer of the claim as soon as practicable after learning of a claim or potential claim, failing to provide the Insurer with the information it reasonably requires, and/or failing to cooperate.
However, the Innocent Additional Insured Provisions do not grant coverage for claims reported outside the Policy Period. There are no exceptions. For example, even if the Additional Insureds did not know about the claim, and their failure to report the claim to the Insurer during the Policy Period was through no fault of their own, they will not be entitled to coverage. The Innocent Additional Insured Provisions protect Additional Insureds from the Individual Insured’s imperfect compliance with certain policy conditions, but they do not create or expand coverage under the Group Policy where there is none.
Part B (Trust Safety Insurance) of the Group Policy contains similar provisions and participating lawyers are urged to review the Group Policy in its entirety.
The summary contained above is provided for information purposes only and not as legal advice and is qualified in its entirety to the terms and conditions of the Group Policy. The Group Policy contains other terms and conditions which may affect coverage. Members should always review the Group Policy to confirm their obligations in any circumstance.
ALIA looks forward to hearing from the indemnity program’s participating lawyers about this ALIAdvisory and any other communications. Any suggestions f
or future publications are always welcome. Please
email us
your comments or suggestions.
