Shopping for professional liability insurance may not be the most exciting aspect of practicing law, but it is extremely important. Without effective professional liability insurance, an error you make could be financially devastating to your livelihood.
There are several things to consider when looking for E&O coverage for your law firm or individual practice. Give careful consideration to each of these aspects before deciding on a policy for your practice.
Number of Lawyers Practicing
Even if you’re running a small practice, you have to ensure that each member of your team is covered. If you hire a new attorney or somebody leaves the practice, it is important that you report these changes to your carrier and maintain careful documentation of important dates to ensure complete coverage.
Areas of Practice
Different areas of law require various levels of coverage due to differences in the costs of malpractice claims. If your team practices in multiple areas of law, make sure that you report all areas of practice to your insurer and that you have adequate coverage for each.
If you bring a new attorney into your firm, make sure you’re not inadvertently expanding the firm’s areas or practice without informing your insurer.
In addition to the dollar value of your policy limit, it’s important to understand what is included in this limit. For example, defense costs can be included within the policy limit, or they can be covered by a separate limit, leaving the entire coverage amount to pay settlements or judgments.
Understand that policies that cover defense costs “inside the limit” are less expensive but provide narrower coverage than those that cover defense costs separately (“outside the limit”). If defense costs are included in your policy limit, your limit will need to be higher to provide a similar level of protection.
Your deductible should not exceed what your practice can pay in the event of an error, but it needs to be high enough to keep your premiums affordable. In making your calculation, be sure to understand whether your deductible applies to each individual attorney separately or to the practice as a whole.
Be sure you understand how the accounting for per-claim and aggregate deductibles works. Would a single error that results in multiple malpractice claims trigger a single deductible or a series of deductibles (i.e., one for each claim until the aggregate is reached)?
Some policies provide coverage to assist you with things like subpoena response, professional complaints, data breaches, and reimbursement for lost wages. Be sure to understand what is (and isn’t) covered by each policy you examine so you can make the best choice for your firm.
You may also want to explore the costs of extended reporting periods (or tail coverage) to provide protection after an attorney retires or stops practicing for a period of time. This type of coverage ensures that mistakes an attorney may have made while in practice don’t haunt the firm after that attorney leaves.
If you’re struggling to determine whether your coverage is adequate or if you’re looking for new legal malpractice insurance, the professionals at ProDefender are available to help. Contact us today to get started.