Where There’s a Will, There’s a Lawsuit
What is Lawyers Insurance?
Lawyers insurance, commonly known as malpractice insurance, refers to a combination of insurance policies designed to protect the unique risks attorneys face. Typically, it reimburses attorneys for the losses incurred by the legal industry’s various risks. Malpractice lawsuits are the most common lawsuits in the industry.
If there is a lawsuit, there are legal expenses to pay whether you are at fault or not. This is because you have to pay the attorney fees and fight the case to prove yourself innocent. The Connecticut General Assembly states that a client can file a malpractice claim against you up to three years after the alleged misconduct. So, you need to prepare for the worst.
In this blog
Why do You Need Lawyers Insurance?
The benefits of lawyer’s insurance are:
- Protects you against claims of ignorance or negligence.
- Protects your staff against claims.
- Increases your goodwill and builds trust among your client base.
What Policies Fall Under Lawyers Insurance?
Lawyer’s insurance packages many policies into one bundle.
Business Owners Policy (BOP)
A business owners policy will provide coverage for small and medium-sized law firms. It combines commercial auto insurance, general liability insurance, and business interruption insurance into one package. A bundled policy provides protection for your law firm and saves money on insurance premiums. As per the Insurance Information Institute, the insurance is for smaller-sized companies, firms with an annual income of less than $5 million and 100 employees or fewer are eligible for a BOP.
A BOP protects you against bodily injury, property damage, loss of business income, and loss of commercial property. For example, if your employee breaks an antique vase at a client’s home, a BOP will cover the loss for it.
General Liability Insurance
General liability insurance provides coverages for bodily injury or property damage losses. You might be liable to pay for third-party damages if an accident happens during your work hours or on your firm’s property. For example, if your client trips on the floor and falls at your place of business, a general liability policy will keep you covered.
If you are a large firm, you will require a separate general liability insurance policy included in your lawyer’s insurance package. On the other hand, if you have a smaller firm, your general liability insurance can be combined in a BOP.
Commercial Property Insurance
Commercial property insurance provides protection to property owned by a business. Moreover, it covers assets including hardware, electronics, or any other belongings. Also, if you own an office building, commercial property insurance will protect you from named perils.
Workers Compensation Insurance
Workers compensation insurance covers your employees when they suffer from an illness or injury due to work. This policy is crucial in lawyer’s insurance because fighting legal cases can be stressful and dangerous. According to a survey by the Bureau of Labor Statistics, in November 2019 there were around 66,100 workplace injuries and 4,400 workplace illnesses in professional and technical services.
Commercial Auto Insurance
Commercial auto insurance provides coverage to automobiles owned by a business. Personal cars that are used for commercial purposes are covered by this insurance. As stated by Forbes, you can get a tax deduction when you use an automobile exclusively for business operations. If your employee gets in a car accident and their personal auto insurance is not sufficient to cover their losses, commercial auto insurance also provides additional coverage.
Commercial Cyber Liability Insurance
Commercial cyber liability insurance provides coverages for losses caused by cybercrimes. These losses can be from data loss, misuse of online data, theft or malware. Cyber liability insurance covers both the direct and indirect costs of cybercrime. Also included are the costs related to lawsuits because of a data breach.
According to Statista, in 2018, the United States was the country most severely affected by cybercrime in terms of financial damage. Experts estimated that the U.S. government faced costs of over 13.7 billion U.S. dollars as a result of cyberattacks. Moreover, as data breaches have increased in recent years it is important to have a cyber liability policy in your lawyer’s insurance package.
Commercial Umbrella Insurance
Commercial umbrella insurance provides additional coverage to general and auto liability policies. For instance, if your employee were to get in a car accident while on the job and get badly injured, you will need to pay for their medical expenses. Also, the expenses might exceed the limits of the policy in play, which can cause a substantial financial burden to your firm. In this case, umbrella insurance comes to your aid.
Malpractice insurance covers professionals when a client sues them. Hence, this policy is called lawyers’ professional liability insurance.
For instance, if a client sues you for professional errors, misjudgments, or malpractice, malpractice insurance will cover you. The American Bar Association mentions that a lawsuit for malpractice is filed against four out of five lawyers once in their career.
Malpractice insurance for lawyers gives you the peace of mind to focus on your work and frees you from worries about bankrupting yourself if you make an honest mistake. For instance, if a client loses a case and sues you for negligence, malpractice liability will keep you covered.
Some standard exclusions in lawyers insurance are:
The law excludes intentional fraud or criminal activities because they are uninsurable.
Legal services to related firms
The law excludes legal services provided to firms or those owned by your attorney.
Internal employee conflicts
Lawsuits for legal fights between the employees of the same law firm will be excluded from the package as a general rule of thumb. Internal conflict management systems can help in resolving such issues.
The lawyer’s insurance will not be claimed if it was expected before purchasing a policy. But in some cases, the insurer might deny coverage even after advance notice.
Any perils except for named perils are excluded from the insurance package. These named perils are decided before signing the agreement for the insurance. Additionally, they generally include loss due to theft, fire, and vandalism.
Cost of Lawyer’s Insurance
The premium costs for lawyer’s insurance differ for every attorney. The risks for each law firm are different and the cost varies accordingly. So, some of the actors affecting the cost of insurance for lawyers are:
- Past claims history
- Areas of operation
- Number of employees
Insurance can help lawyers pay for lawsuits and settlement costs. Contact an insurance agent and cover your loss instantly.
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Your local insurance agent will helpfind your best coverage opinion. Speak with them today.
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