Attorney Professional Liability Insurance and Coverage Determinations

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Attorneys must factor in the potential for facing a costly and time-consuming lawsuit when making decisions about attorney professional liability insurance and what constitutes having adequate coverage. The amount of coverage that any lawyer should purchase should pertain to their own philosophies about risk-taking, along with their current financial solvency, and the types of risk they may face in their line of practice.


Some attorneys are more likely to face issues of malpractice or breach of fiduciary duties than others. The answer as to how much coverage is actually needed is best determined through consultation with an experienced lawyers’ professional liability broker trained to help analyze the types of risks and concerns facing individual lawyers and their firms. Only upon knowing a particular situation can they then suggest the appropriate limits and deductibles.

Factors to consider when choosing coverage options


Some factors to consider include potential defense costs; indemnity for liability, and billable time lost to depositions, trial or other claims proceedings. What is the likelihood of a lawsuit and how frequently might this be an issue? Also, what is the possible severity of these types of claims?


In some areas of practice, for example, residential real estate or collections practice, the likelihood of facing a claim is much higher than in other areas of practice, but the average amount of any one claim may be much lower. Those who work in patent law, securities work or entertainment law, where claims are less frequent, but yet there is the potential for significantly higher losses.

Circumstances often dictate coverage decisions

Depending upon specific circumstances, some law firms may want to place some limits on the activities and claims that their policy is intended to cover. This is done primarily so that they do not carry the risks other firms or attorneys bring with them as lateral hires or in mergers. This is typically done through a “prior acts date” or “retroactive date”. Therefore, maintaining continuous coverage is extremely important because only an in-force policy can provide coverage when a claim arises.


Another area of concern for many attorneys is a lapse of, or gap in coverage. Gaps in coverage can arise when moving from firm to firm or when ceasing to practice, even for a short while. One way to avoid a gap in coverage is by maintaining coverage with one insurer. These are just a few things to consider when making choices for attorney professional liability insurance coverage.


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