Florida Insurance Claims Adjuster License Practice Exam

What is unique about lawyer's professional liability insurance?

1. It covers claims that existed before the policy was effective.

2. It deducts claims expenses first and the balance is payable for the claim.

3. It covers lawyers for fraudulent activities.

4. It covers only lawyers in group practice.

The correct answer is: It deducts claims expenses first and the balance is payable for the claim.

Lawyer's professional liability insurance is unique in that it deducts claims expenses first before paying the remaining balance for a claim. This means that the insurance will cover all defense costs and expenses before paying the actual claim, which is different from other types of insurance where defense costs are typically included in the policy limit. Option A is incorrect because most insurance policies do not cover claims that existed before the policy was effective. Option C is incorrect because lawyers can be covered for fraudulent activities under other types of insurance, but it is not the defining factor of lawyer's professional liability insurance. Option D is incorrect because this type of insurance covers both individual lawyers and those in group practice.