The Business Innocent Covered Party (BIC) Policy is an optional professional liability policy designed to protect innocent lawyers in firms who may face claims that are otherwise not indemnifiable because of the business interests of another lawyer at the firm. The coverage will apply when partners are unaware, despite reasonable and regular enquiries, that another lawyer in the firm was providing legal services that trigger the business exclusion.

Although practising lawyers in BC must pay the indemnity fee for the BC Lawyers' Compulsory Professional Liability Indemnification Policy (the "Compulsory Policy"), Exclusion 6.2 of that policy — "the business exclusion" — operates to exclude from coverage a claim by or in any way connected to any organization in which the lawyer, his or her family or law firm partners, associates or associate counsel had effective management or control or a greater than 10% ownership interest at the time of the error. Coverage is excluded for both the lawyer responsible for the error and for any lawyers vicariously liable for the responsible lawyer's acts. Vicarious liability arises by virtue of the lawyer's partnership or employer/employee relationship with the responsible lawyer.

The BIC Policy provides coverage to innocent lawyers who face such vicarious liability, but who have lost coverage under Part A of the Compulsory Policy because of the application of the business exclusion. Lawyers are innocent if they are unaware, despite reasonable and regular inquiries, that the responsible lawyer was providing legal services in circumstances that triggered the application of the business exclusion. If the lawyer knows, or ought to have known with due diligence, about those circumstances, there is no coverage under the policy. To assist firms, the Lawyers Indemnity Fund has developed a protocol which, if implemented, the Indemnitor will accept as meeting the policy's due diligence requirements.

 

Learn more about how the compulsory policy Exclusion 6 (the 'benefit and business exclusion') operates in relation to negligence claims and trusts. The summary also offers information about a due diligence process to disclose activities that may trigger the Exclusion, as well as a sample questionnaire.

Partners, apparent partners and sole proprietors may apply for the BIC Policy, as each of these lawyers may face vicarious liability for the negligence of another lawyer. Although the firm must complete the application form for the BIC Policy, the policy benefits those innocent lawyers who face vicarious liability.

The policy limits are $1 million, $2 million in the aggregate, inclusive of both defence costs and indemnity payments, and subject to a deductible of 10% of the total amount of any such costs or payments. The policy term begins either at the start of the calendar year or the date an application is approved, and expires at the end of the calendar year.

For 2020, the BIC indemnity fee is calculated on the basis of $300 for each lawyer at a firm — partners, associates, associate counsel — who is covered under the Compulsory Policy.

The firm must have the policy both at the time of the error and at the time the claim is reported. The coverage need not be continuous, provided these two requirements are met. There is no coverage for any errors occuring before January 1, 2002.

Please note that the BIC policy does not provide coverage for legal services triggering Exclusion 6.1 of Part A of the Compulsory Policy, the "benefit exclusion". If a lawyer provides services that fall within the benefit exclusion, coverage under the Compulsory Policy will be denied to that lawyer and any other lawyer vicariously liable for the claim. More information on the benefit exclusion is available in the summary of Exclusion 6.

Full details regarding the BIC Policy are available from the Lawyers Indemnity Fund. If you are interested in receiving an application and more detailed information, please contact Shelley Braun, Claims and Underwriting Manager, at 604.446.5761 or sbraun@lsbc.org.

 

This summary of the BIC Policy is not intended to be exhaustive or definitive, and is provided for your guidance only. The policy wording governs.