As an insurance agent for law firms, your clients are regularly exposed to liability. Whether it’s a missed court filing within the statute of limitations, a forgotten contractual provision, or an employee fraud scenario, there’s a fair amount of risk in the work they do each day that you need to protect.
Lawyers’ Professional Liability (LPL) insurance isn’t required in most states, but it is highly recommended, particularly since the financial impact and cost to defend against legal professional claims is on the rise. Professional liability coverage can protect your client attorneys and their firm from costly malpractice claims.
When it comes to liability coverage, there are two primary types of coverage – Professional Liability which is also referred to as Errors and Omissions (E&O) liability or Legal Malpractice, and General Liability (GL). E&O coverage helps protect your clients against claims related to alleged errors and omissions in work performed for their clients that result in economic damages. General Liability on the other hand, relates to liability for such things as third party slip and falls on the law firm premises which cause bodily injury to a person or property damage. Both coverages will provide for the cost of hiring attorneys to defend the insured law firm against such claims, as well as provide funds to cover settlements or judgments.
Not Required?
Yes. You read correctly. LPL insurance is not normally required in most states, with the exception that Oregon has a state mandated monopolistic state bar program that all Oregon attorneys must be a member. A handful of other states do not require LPL insurance unless you are practicing under a limited liability entity. Some other states do not require LPL insurance, but if you don’t have it, you must disclose that to your client in writing. But according to a 2022 survey by insurance broker Ames & Gough, the costs of legal malpractice claims have risen significantly since the pandemic. While the frequency of claims has remained consistent – claims severity has increased, meaning higher payouts in settlements and judgments against law firms. It would be foolhardy not to recommend Lawyers Professional Liability (LPL) on a primary (or a primary/excess basis if the primary carrier will not offer enough limits).
If your legal clients fall into one of these categories, they should seriously consider LPL insurance:
Law practices who specialize in personal injury, real estate, bankruptcy, trusts and probate, finance, family law or other high liability areas
Law firms with multiple lawyers, as one lawyer’s actions could potentially cause losses to the other lawyers in the firm
Law firms with partners that have high net worth
The most recent hard market is coming to an end for Lawyers Professional Liability. You should anticipate new and potentially inexperienced underwriting markets entering the market, with the possibility of raising limits and lowering retentions over the next few years. As their agent, you need to be aware of all the coverage options available to your clients.
Your clients’ premium/rate for LPL coverage will vary based on what type of law they practice, liability limits, and the personal claim history for the firm’s attorneys. Whether your client is a solo practitioner, small to mid-size firm, or an established practice or a new one, the right carrier can help you manage even hard to place and non-standard risks with the right policy limits based on your clients’ unique level of risk.
What should you look for in a carrier?
Stability. Make sure the carrier they represent has an A.M. Best rating of A- (Excellent) Class VII (Size) or better.
Experience. Find a carrier who specializes in developing and managing complex and innovative insurance plans for lawyers, including one with the markets and flexibility to build the right coverage for your clients.
Expertise. You need a carrier with the tools to customize a comprehensive policy with significant provisions for continuity of coverage, limit of liability, deductible, and extended reporting period.
Getting started
At Vanguard Specialty, we leverage our more than 100 years of combined experience in E&O insurance to develop, manage, underwrite and distribute innovative insurance products and services for our carrier partners.
If your brokerage handles the insurance needs for a law firm, add Vanguard Specialty to your submission list by contacting Stephen van Wert, Managing Director, Vanguard Specialty at Stephen.Vanwert@vanguardspecialty.com or 813.999.8090.