7 Tips to Save Costs on Malpractice Insurance for Lawyers
Whether you are thinking of going solo, starting your own law practice, or have been running your firm for quite some time, the cost of your professional liability insurance is something you should consider carefully when drawing up your budget.
Even if the individual payments are on the smaller side, they can pile up over time, which may affect your bottom line.
To get the most out of your coverage plan for less, check out the suggestions on how lawyers can save costs on malpractice insurance below.
How to Cut the Cost of Your Malpractice Insurance as a Lawyer
To help reduce the price of your policy while increasing its value, consider the following tips:
1. Compare Multiple Quotes
Before settling on an insurance carrier and policy, you should spend some time shopping for quotes. While it may not be a good idea to base your choice solely on price, comparing four or five premiums from different providers can help you get a better understanding of the market and may save you money.
2. Look Up the Available Premium Payment Modes
Once you choose an insurance provider, you may want to look up what premium payment modes it has to offer. Sometimes, making an annual lump payment instead of paying in smaller but more frequent installments may be more cost-effective in the long term.
3. Opt for a Higher Deductible
Selecting a higher deductible may be riskier in the short term, as you would have to cover more of the expenses associated with potential lawsuits before your insurance kicks in. However, this can result in savings later on.
4. Consider How Much Protection You Really Need
If you run a low- to moderate-risk practice, you may not need the maximum coverage limit. Consider your risk exposures carefully, including your area of practice, the type of work you do, and any past malpractice claims, and choose a limit that provides an optimal amount of protection.
5. Provide Your Provider with as Much Information as Possible
As you fill out the application, provide as much and as precise information as possible. This can help ensure that your quote will accurately reflect your risk exposure. Key elements to consider include:
Areas of Practice
Studies show that some practice areas trigger more malpractice claims than others. According to the American Bar Association’s Profile of Legal Malpractice Claims
for 2015–2019, the top ten practice areas for claim frequency were:
- Personal injury (plaintiff)
- Family law
- Real estate
- Estate, trust, and probate
- Collection and bankruptcy
- Business transaction/commercial law
- Criminal law
- Corporate/business organization
- Patent, trademark, and copyright
- Personal injury (defense)
In contrast, fields such as administrative law, insurance, and immigration may be considered safer.
With this in mind, be careful not to submit an inflated percentage of hours or revenue for high-risk areas. If you do only a small amount of work in a high-risk field, you may want to consider dropping it from your practice altogether. The lost earnings may be lower than the associated insurance costs.
Alternatively, provide your provider with a detailed breakdown of the nature of your activities in claims-prone practice areas. These may be less risky than they may seem at first.
If you do not work alone, your application should feature a complete list of the attorneys in your practice and their respective roles. These may include:
You should also state whether they are contract or “of counsel” attorneys. Providers may view full-time partners and associates as less risk-prone than contractors and “of counsel” attorneys, and you may get a premium reduction if you employ more of the former.
Having well-documented internal procedures aimed at minimizing the risk of malpractice litigation can also help reduce the costs of your professional liability insurance. Examples include:
- Calendar controls
- Docket management systems
- Engagement and retainer letters that clearly set out the scope of your duties to each client
- Systems for identifying conflicts of interest
Insurance companies will typically want to know whether you have had any claims filed against you in the past five, seven, or ten years. If so, you will need to provide details about each separate incident. This allows you to present the context and any mitigating factors. It may be a good idea to also explain the steps you may have taken to prevent similar incidents in the future.
Your carrier may not view fee suits in a favorable light. Attorneys who initiate suits to collect unpaid fees often file them in countersuits that cost insurance companies money. As a result, any efforts on your part to prevent fee litigation may reflect positively on your insurance premiums. These may include:
- Proper and regular invoicing
- Structuring retainers correctly
- Firing clients who may be financially irresponsible
- Having a formal procedure in place to assess the need for filing fee suits
6. Take Part in Risk Management Training
Some insurance providers may offer you a premium discount upon successful competition of their risk management
or loss prevention training. These programs are often provided online via webinars or other platforms, allowing you to take them in your own time. In addition to cutting back on your insurance costs, you may learn valuable new information to help you safeguard your practice.
7. Explore Contractual Methods to Limit Liability
Another way to reduce your insurance expenses may be to use contractual methods in your own work that limit your risk exposure. For instance, you may consider requiring alternative dispute resolution in the event of potential disputes with clients.
Looking to Save Costs on Malpractice Insurance for Lawyers?
It all starts with finding a provider you can trust. At Aon Attorneys Advantage, we specialize in providing comprehensive yet affordable professional liability insurance to solo attorneys and small law firms. Contact us today to learn more about our products and find out how they can help protect you and your practice.
Get a free quote.