Although lawyers are often hired to protect the public, they also face various risks in their work.
That’s why they need some form of insurance to protect themselves.
Offering legal defense and professional advice to clients presents a host of risks to lawyers.
You might not know how the advice you are offering will affect your client. The best option is to talk to an insurance agent and see the best form of insurance cover to take.
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Consideration for lawyer liability insurance
If you are running your own law firm, then professional liability insurance coverage is not an option. The main purpose of lawyer liability insurance is to guard lawyers from any damages that result from professional mistakes.
Lawsuits against legal practitioners can be costly. It can drain lawyers financially as well as cost the reputation of their business.
However, with a professional liability insurance cover, the insurance company is the one to cater to all the expenses that result from malpractice lawsuits.
For example, if a client files a lawsuit against a law firm, the insurance company will be the one to pay for all the legal fees and other expenses associated with the malpractice case.
How will you know that your law firm is providing enough liability insurance?
If you are working for a law firm, you need to determine if the company is providing you with enough protection against potential malpractice lawsuits.
Below are some of the ways you can determine if you are covered by the law firm’s liability insurance or not:
- Find out if you are covered under the company’s liability insurance: Various professional liability policies have stipulations as to who is covered and not covered by its policy. Different law firms have their own criterion for deciding who qualifies for professional liability insurance and who doesn’t. Sometimes you might think that you are covered when actually you are not. For instance, some lawyers work on a part-time basis for various law firms. In such cases, a lawyer will be in a vulnerable position – since most companies only cover for their full-time employees.
- Limits of the policy: Another thing lawyers should seek is the limit of the insurance cover. You should be able to find out the limitations that come with a malpractice insurance policy. In case you feel that the terms of the policy do not offer adequate protection, then the best option is to supplement it with another policy.
- What are the deductibles of the policy?: Lawyers should also find out the law firm’s coverage deductibles. The company should clarify whether it will pay on their behalf or require employees to pay for it. In case the deductibles seem too high, then the best option is to purchase your own cover.
- If the malpractice insurance covers retired lawyers: There are instances where malpractice cases are launched years after a lawyer has retired. There are law firms that do not offer malpractice insurance to retired attorneys. As such, lawyers need to find out if their companies will still protect them after retirement or not.
Do lawyers need malpractice insurance?
Although lawyers are known for providing the best defense and legal advice, none of them is immune to committing professional mistakes. Several lawsuits are being launched from time against lawyers because of professional malpractice.
Most of these cases (about 70 percent) involve lawyers from small law firms or those doing private practice.
Below are some of the reasons why lawyers get sued:
- Administrative errors: lawsuits against administrative errors involve losing crucial case documents that are costly both for the client and the attorney handling the case.
- Professional misconduct: This is when a lawyer gets accused of acting in a manner that fails or compromises the safety and health.
- Negligence: Negligence involves the failure of lawyers to carry out adequate investigations, provide professional advice, or present important court documents.
- Missing deadline: When a layer fails to present the required court documents on time, a case can be dismissed and cause grave implications to a client. That client has a right to sue that particular lawyer for professional malpractice.
- Breach of confidentiality: This is a situation where a lawyer discloses private or personal information to third-party individuals without the express consent of the client.
What is and is not covered by professional liability insurance
Although professional liability insurance covers a wide range of issues, it doesn’t protect against everything. Below is a list of things that an insurance company won’t cover:
- Employee dishonesty
- Intentional harm
- Bodily injury
- Damage of property
- Statutory or regulatory penalties
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Benefits of lawyer liability insurance
There’s no doubt that lawyers need professional liability insurance. Let us see some of the major benefits of this type of insurance.
- It protects lawyers against professional negligence: Lawyers interact with many people in the process of helping them tackle legal issues. It is possible to make honest mistakes while serving those clients. In case a client files a lawsuit against a lawyer, the insurance cover protects him or her.
- It covers for liabilities not included in the commercial general liability: Commercial general liability is a type of insurance meant to protect businesses against any costs resulting from accidents within a business’s premises.
However, professional liability insurance extends the coverage for mistakes committed by employees.
What is the cost of lawyer liability insurance?
The cost of professional liability insurance generally depends on a variety of factors. For instance, the size of a law firm, the number of clients, the type of services being offered, and the potential risk resulting from those services.
On average, a professional liability policy may cost about $1,200 per year – for lawyers who engage in the provision of less risky services. However, attorneys engaging in high-risk cases can pay up to $10,000 or even more per year.
Lawyer liability insurance has a lot of benefits. It protects you against any potential lawsuits from the clients you serve.