Legal malpractice insurers calculate your premiums based on several factors, including the length of time you’ve been in practice, the area(s) of law you practice, your risk management practices, and your history of claims.
While large claims (or a large number of small claims) can cause your rates to increase substantially or even make you ineligible for coverage, not every claim will necessarily result in a premium hike. To keep your rates as low as possible for your practice, take the following steps.
Implement risk management procedures.
An insurer’s policy application can give you insight into which risk management practices it prioritizes and rewards in its clients. Common risk management procedures include getting a signed engagement letter from each client, maintaining continuing education, having a reliable system for screening out conflicts of interest, and having policies in place to protect confidential client information.
Communicate with your insurer.
“Insurers want their clients to let them know about possible suits, even if they seem unlikely to progress, because getting ahead of the problem can often lead to a less costly resolution,” says Joe Barnard, Director of National Programs for ProDefender. “When considering what to report to your insurer, err on the side of over sharing. It’s in the insurer’s interest to provide you protection from the very beginning.”
When you communicate with your insurance provider from the moment you have reason to suspect a claim may be on the horizon, you get access to expert legal protection that can help you minimize the impact in the event that a claim eventually does arise. ProDefender’s malpractice policy protects against professional complaints, which are much easier for disgruntled clients to file than lawsuits but can still do real damage to your practice—both in labor hours needed to defend against the complaint and in potential damage to your professional reputation.
Whatever happens, your professional liability insurer’s legal team can provide expert advice every step of the way, from deciding how best to respond to a client’s threat or what actions to take after you discover you’ve made an error through responding to and defending a legal claim. By taking advantage of these benefits, you make it possible to resolve claims at the lowest possible cost, which will, in turn, help to keep your insurance rates as low as possible.
Don’t make the mistake of trying to hide problems from your insurer.
Fear of a rate increase might tempt you to avoid talking to your insurer, but this could be the most costly mistake of all. Malpractice policies typically require you to immediately notify the insurer of any error or potential claim that you’re aware of. Failing to do so can leave you without coverage for that claim and unprotected from potentially catastrophic losses.
Be sure you understand your insurer’s notice requirements and follow them scrupulously to avoid losing valuable protection. ProDefender provides a free fax hotline: insureds can submit questions to (877) 834-3548 without notes being added their record. If you’re in doubt about whether an event should be reported, take advantage of this resource.
Will a single claim increase my premium?
Ultimately, the answer to this question is, “it depends.” A clean history can earn you premium credits that can result in as much as a 30% discount. A small claim may have no effect or a negligible one on your rate.
A severe claim, however, will likely cause a substantial rate increase, as will frequent claims. The important takeaway is that whatever you’re facing, including your insurer in the conversation and letting them advise you from the beginning is the best way to control costs and protect your practice.
If you’re ready to obtain professional liability insurance for your legal practice or shop for a new plan, contact ProDefender. Our team has more than 35 years’ experience producing and underwriting legal malpractice policies. Click the link below to request a quote, or call us at (866) 434-8557 to discuss your options and find a policy that fits your firm’s needs and budget.