It isn’t always easy to understand insurance. There are a lot of questions surrounding the different types of coverage that law firms may consider. In this blog post, we are focusing on five tips to help you better understand the types of insurance coverage law firms may consider.

You will learn more about:

• What the coverage is designed to protect; 
• The type of deductibles offered;
• If your current or proposed coverage will be enough in the event of a claim;
• Insurance coverage for pro bono work; and
• Coverage for firms who engage independent contractors for legal services

First, though, we want to take a short detour to quickly discuss a few of the types of insurance that law firms may consider.
 

What Type of Insurance Should You Consider? 

Depending on your practice, you may want to consider:

• Malpractice insurance;
• Business Owner’s Policy (BOP);
• General liability policy (which may or may not be included within a BOP);
• Commercial property insurance;
• Cyber liability insurance;
• D&O insurance (if your law firm has a board of directors);
• Employment practices liability insurance (EPLI); and
• Workers’ compensation insurance.

 

Understand What the Coverage Protects

Whether you’ve already purchased insurance coverage or received a quote, take the time to understand what may and may not be protected under the terms of the particular policy. Recall that the previous section mentioned both a Business Owner’s Policy (BOP) and general liability insurance coverage. A BOP may include General Liability coverage. However, that’s not always the case. Make sure you know what a policy offers before you may need to make claim rather than if something happens and you find that you may not have the proper coverage in place. 
 

Determine the Type or Types of Deductibles Offered

First, we aren’t talking about the deductible amount that you may choose. Of course, that’s another important factor. However, what we’re focusing on is helping you better understand the two different types of deductible payments you may see if a claim is made, depending on your policy.

• A per claim deductible is the amount an insured is responsible to pay each time a claim is made. 
• An aggregate deductible is the maximum amount that an insured pays in a single policy year regardless of the number of claims made. 

You may also wish to consider when the payment of the deductible must be made. For example, if your policy has a per claim deductible, you should check to see if you are required to pay it before an insurance company pays a loss or afterward. 
 

Is Malpractice Insurance Enough?

It is important to understand if the coverage you have is sufficient. 

Some states require a minimum amount of malpractice insurance coverage or a law firm’s clients must be notified. In Alaska, Ohio, and New Hampshire attorneys need to notify clients in writing if they do not have malpractice insurance or their coverage is less than $100,000 per claim and $300,000 aggregate. Additionally, in Alaska, Ohio, and New Hampshire, if coverage is terminated or drops below the $100,000/$300,000 levels, an attorney must notify their clients. 

Check with your state bar to see if your state has a minimum amount of coverage required. 
 

Pro Bono Work and Professional Liability Coverage 

If you or another lawyer who works in your law firm prioritizes pro bono work, we think that’s great! Yet, it’s important to check whether or not this work is covered by your professional liability policy. 

You should ask your insurance agent and read the policy. It’s important to understand how your coverage defines “legal services”.  
 

Independent Contractors and Professional Liability Insurance

The workforce has certainly changed. Maybe you’ve decided that instead of bringing on another lawyer as an employee, you’ll use an independent contractor only as needed. For many small law firms, this could be a smart plan. You get the help you need on client matters only when you need it. 

Yet, it raises an interesting question where your professional liability insurance coverage is concerned. If a claim were to arise from a contractor’s legal services, would your firm be covered? It’s important to obtain confirmation from your insurance provider that services rendered by an Independent Contractor are covered by the law firm’s professional liability policy. 
 

Learn More about Insurance Coverages for Small Law Firms

Insurance is a helpful investment for your small law firm. Aon Attorneys Advantage is here to help solo attorneys and small law firms secure coverage for their firm and give peace of mind so that you can focus on your practice. 

Get your free quote now! 

^{This information is provided for general informational purposes only and is not intended to provide individualized advice. All descriptions, summaries, or highlights of coverage are for general informational purposes only and do not amend, alter, or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.}