Bobby N. Harmon, CPCU, ARM

10951 Southgate Manor Dr. #4                                              Tel & Fax No. (502) 964-0694

Louisville, Kentucky 40229-1655

February 28, 2003

VIA fax only @ (406) 728-7416

Robert S. Tameler

Attorney Liability Protection Society

P.O. Box 9169

Missoula, MT 59807-9169

RE:    NEW PROFESSIONAL LIABILITY CLAIMS - HARMON v. TAMM & DUNN

           Ref. Prior ALPS Claim Numbers B023134 & B023235

Dear Mr. Tameler:

This is to acknowledge receipt of your letter dated February 24, 2003, regarding my newly

reported claim, and to state my firm disagreement with your statement that this is not a new claim. I base my position on the assumption that your Lawyers’ Professional Liability policy is written on the customary “claims made” basis. If this is correct, then the policy will contain a definition of what constitutes a “claim made” (or what “triggers” the coverage). This is a very important condition in the policy and one that distinguishes it from an “occurrence” policy.

In an “occurrence” policy, the date that the loss “occurs” is the event that “triggers” coverage. In the current case, the “occurrence” date might be considered the date that the creditor breached the automatic stay provisions. Claims under an “occurrence” type policy are not limited to a specific time and date and can take place over extended periods of time (as with exposure to asbestos). The “trigger” under “claims made” policy, on the other hand, is specific in time and date, that is, the date that the injury is REPORTED – not the date that it OCCURS.

Therefore, I would suggest that you carefully review this definition in the policy with your insureds before attempting to characterize this as not a new claim.

The “claims made” date has important significance for your client in several areas, not the least of which may be the insured’s “per claim” and “per policy period” limits of insurance. In other words, by characterizing these various new claims as one claim, with one “claims made” date, your insureds would have protection only up to the “per claim” and “per policy period” limits; whereas, if they are treated as separate claims, with separate dates that may fall within different policy periods, EACH separate claim would be afforded the full “per claim” and “per policy period” limits.

These “claims made” dates are also very important to the client in the event this policy is not renewed at either the insured’s or company’s election, especially when you start talking about the cost of providing “tail” or “extended discovery period” coverage.

Given my understanding of the “claims made” policy, I therefore still consider all newly discovered and reported losses as “new claims”. If I am mistaken in my assumption that the policy is a “claims made” policy, and it is in actuality an “occurrence” policy, then I will review the circumstances of the claim and reconsider my opinion.

Your prompt response will be appreciated.

Very truly yours,

Bobby N. Harmon, CPCU, ARM

cc’s:  Gregg Dunn and Bradley R. Tamm, Esq.

          (via fax @ 808-524-4844)