Glossary of Legal Malpractice Insurance terms

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Before you buy your malpractice insurance policy, you must understand common malpractice insurance terms. While many of these terms may be familiar to you from other insurance policies, certain terms are unique to malpractice insurance.

Here’s FindLaw’s Glossary of Insurance Terms to help you out.

Glossary of Insurance Terms

  • Best’s Capital Adequacy Relativity (BCAR):
    A measure of an insurance company’s capital strength. Each company is assigned a letter grade derived from proprietary methods developed by Best’s, a rating and analysis company. This letter grade is a good indicator of an insurance company’s monetary strength.
  • Broker:
    Insurance advisor representing the insured when shopping for insurance. In some cases, a broker is affiliated with a particular insurance company. An independent broker represents two or more insurance companies. Brokers earn commissions on selling and servicing insurance policies.
  • Claims-Made Policy:
    A type of policy that covers claims that are made during the policy period. If a claim occurs after the policy period, it is not covered even if the event occurred during the policy period.
  • Coverage Period:
    The duration of coverage.
  • Declaration Page:
    The part of the insurance policy that discloses the basic terms of the policy.
  • Defense Costs:
    The cost of defending the claim.
  • Endorsement:
    An amendment or exception to the policy terms.
  • Eroding Limits:
    Type of coverage that includes the cost of defending a malpractice claim in the total policy limits. Sometimes referred to as self-consuming policy.
  • Experience:
    A record of losses.
  • Insured:
    The consumer of the policy. Also known as the policy holder.
  • Limits of Insurance:
    The total amount past which an insurance company is no longer required to pay.
  • Managing General Agent:
    An intermediary between the insurance company and the broker, representing the insurance company. In certain cases, a broker contacts an insurance company via a managing general agent. This practice is more common when the broker does not represent a specific company.
  • Occurrence Policy
    A type of policy that covers claims relating to an occurrence during the policy period. If the event occurs during the policy period, it is covered even if the claim is brought after the policy is no longer in effect.
  • Policy:
    The contract defining all the terms and conditions of the insurance coverage.
  • Policy Limits:
    The maximum coverage offered by the policy. It may be set in an aggregate basis or in a per-claim basis.
  • Policy Period:
    The time between the start or inception of the policy and the end or termination of the policy.
  • Premium:
    The cost of the insurance policy.
  • Prior Acts Coverage:
    Coverage for acts undertaken before the policy start date.
  • Settlement Approval:
    The right to approve settlements for any malpractice claims.
  • Tail Coverage:
    Coverage for acts undertaken after the policy end date. Sometimes referred to as extended reporting endorsement.
  • Underwriting:
    The process by which an insurance company evaluates your risk.

– See more at: http://practice.findlaw.com/practice-guide/a-glossary-of-legal-malpractice-insurance-terms.html#sthash.3rW5dU9V.dpuf