Lawyers Professional Liability Insurance

New attorneys often forget about the importance of lawyers professional liability insurance.  Even if their state requires it, some attorneys do not take the matter seriously.  They simply end up buying the most basic policies, without thinking about what is being offered.  Such an approach will lead an attorney to failure, regardless of what type of law they are practicing.  Whether you are a criminal attorney fighting dramatic legal battles in the courtroom, or a “systematic” attorney spending more time in the office, you are at risk of being sued.  In fact, studies have shown that 6 percent of all attorneys have endured liability lawsuits.  Those who had good insurance did not have to pay a penny at settlement.  After their deductible was paid, the insurance company took care of everything.  Attorneys without the best coverage would have to resort to other means for handling their judgment.  In the worst cases, their practice had to be shut down.  You can avoid these consequences by knowing what to buy the first time around.

Lawyers professional liability insurance comes in two basic forms.  The most popular is known as “claims made and reported.”  With this insurance, attorneys receive compensation on claims as they arise.  The actual date of liability does not matter, though most insurance companies will have a prior acts clause.  Through this clause, there is a cut-off date for all past acts, whether they are omissions or errors on behalf of the attorney.  Not anything before that date can be filed under this type of insurance.  The process works differently under occurrence-based coverage, the second form of attorney’s insurance.  Claims are filed as an incident happens, (usually based on the perspective of the litigant).

Now, regardless of which insurance you get, you should know that both carry the same types of options.  Compensation ranges from $100,000 to $10,000,000, with the more expensive policies carrying higher deductibles and premiums.  Of course, there is the option of getting first dollar defense, if a deductible seems overwhelming.  First dollar defense eliminates the payment if a settlement is reached.  This means that if you end up winning the case without any indemnity, you are still responsible for the deductible.  Even still, expect to pay higher premiums with the first dollar defense option, as it is considered a bit risky for insurance providers.  The same is also true if you filed claims before and/or you practice an area of law prone to lawsuits.  Fortunately, there is a way you can lower your expenses.  If an insurance provider offers risk management classes, you can get a discount if you attend each session.  Some of these discounts exceed 5 percent of the overall premium, an amount that cannot be ignored.  On a very expensive insurance bill, attorneys could save over $100 just by attending these classes.  In the process, you will learn an invaluable skill: how to minimize your risks so that lawsuits do not occur.