Ensure Your Coverage Won’t Fall Through When You Need It.
Professional liability coverage is essential in protecting your firm from malpractice lawsuits. When a claim comes, you want to be absolutely certain you have more than enough professional liability insurance coverage and proper indemnity limits to protect your firm and your assets. Often, legal practice malpractice claims arise years after the original service was provided, which is why it is so imperative to ensure that you have a seamless professional liability insurance policy set from the very beginning.
Gaps in coverage typically occur when the firm size changes, new areas of practice are added, the value of the clientele has changed, there have been lateral hires, part-time, contract, pro-bono or of counsel work. When properly used, retroactive dates and tail coverage will fill most gaps. Understanding exactly what is and is not covered under your policy is key to protecting your law firm. When determining the right policy for your firm, there are many factors of which to be aware.
Arguably, the most important components of any malpractice policy are the policy limits, which are normally expressed in a per claim/aggregate manner. While there is not an exact formula to determine the amount of coverage needed, one should take into account the type of work that is performed and the amount of damage that could be imposed when an error is made.
Most policies contain deductible clauses and the specific terms vary. Often, differences lie within when and why you may have to pay the deductible. Policies with a “first-dollar defense” only require that the deductible is paid if and when a settlement is reached, or when an adverse judgment is entered. A majority of claims with defense costs resolve without a loss payout, so this can be an attractive benefit for firms, especially in the case of frivolous lawsuits. Sometimes policies can be canceled, or reapplications denied for nonpayment of the deductible. Other differences can include reduced deductibles for claims resolved through mediation or a limit on the number of deductibles that must be paid in a given policy period.
Another important factor to consider when determining your coverage is defense costs. If defense costs are inside of the limits (CEIL), then each dollar spent to defend a claim, will reduce the amount available to pay the claim by one dollar. A better alternative is a claims expense outside the limit (CEOL) which provides significant defense costs before the policy limits begin to self-liquidate. Due to the additional coverages that they will provide later, CEOL policies are initially more expensive.
Lawyers are known for holding sensitive information but malpractice claims occur most often in the following areas of practice:
- Real Estate
- Corporate Business Organization & Securities
- Trusts & Estates
- Commercial Business Transactions
- Civil Litigation-Plaintiff
- Intellectual Property
At Lawyers Choice, we begin by completing a thorough analysis of your current policy to fully understand the coverages contained therein and then make recommendations for any additional coverages we think your firm may need before we request your quotes. If we cannot find a policy that meets your firm’s needs or if a unique exposure is identified, we secure customized endorsements to close any coverage gaps. Once satisfied with the coverage, we then secure the best premium value for our clients. We know cost is important, but never at the expense of inadequate coverage. Service to our clients doesn’t end there, but continues throughout the policy period. We advise our clients on how and when to report a claim, answer coverage-related questions, and stay abreast of industry and market changes, so our clients are never caught off guard.
We would love to make sure your firm is completely covered. For a limited time, Lawyers Choice will review your current policy for any potential gaps or missing coverages, for free. Send your current policy to email@example.com today and we’ll send back our recommendations within 5 business days!
If you have any questions please call Renee Krause at (720) 226-9423.
Lawyers Choice, LLC
Innovative, Responsive, Reliable Insurance Solutions for Law Firms
7010 Broadway, Suite 220
Denver, CO 80221
Fax: (720) 293-3757
Read More from Lawyers Choice:
- Malpractice Insurance Basics Episode #5: Loss Runs and Their Impact on Your Firm
- Malpractice Insurance Basics Webinar Episode #4: Common Supplementary Payments within your Lawyers Professional Liability (LPL) Policy.
- Malpractice Insurance Basics Webinar Episode #3: Extended Reporting Period (ERP) A.K.A. Tail Policy
- Malpractice Insurance Basics Webinar Episode#2: How Application Answers Impacts Premium and Coverage
- Malpractice Insurance Basics Webinar Episode#1: An Introduction to LPL Policy Terms