Attorneys and law firms of all sizes are susceptible to claims that their professional services financially harmed another party, regardless of their diligence or attention to detail. Lawyers’ professional liability insurance, also called legal malpractice insurance, can provide essential coverage in these circumstances, as it can help pay for the costs associated with these claims. This article provides more information on lawyers’ professional liability (LPL) insurance, including the exposures it may cover, and highlights the benefits of securing it.
Understanding Lawyers’ Professional Liability Insurance
LPL insurance is a critical piece of an attorney’s or law firm’s risk management strategy. Despite extensive efforts to adhere to high service quality standards, attorneys and firms are still vulnerable to claims that their services were negligent or included errors or omissions. These claims can be costly and have significant financial and reputational ramifications.
Lawyers’ professional liability insurance provides essential financial assistance that can help mitigate losses in these situations. Key components of a LPL insurance policy generally include coverage for the following:
- Legal defense costs, even if the claim is eventually dropped
- Damages awarded to clients
- Claims expenses
- Loss of earnings
When selecting a policy, reviewing its specifics is crucial to understand what is not covered. Common exclusions include:
- Criminal or fraudulent conduct
- Losses created from intentional, malicious or dishonest acts
- Employment matters such as discrimination or harassment.
- Client or employee injuries
- Business property damage
Additionally, it is necessary for the insured to review the variable aspects of a policy to ensure it best meets their needs. Factors to consider include:
- Coverage limits
- The provider’s claims handling process and reputation
LPL insurance is usually written on a claims-made basis. This means it generally provides coverage for claims filed during the policy’s active period as long as the event that gave rise to the claim occurred after the policy’s stipulated retroactive date. Occurrence policies—those that can provide coverage if the event occurred during the policy period, regardless of when the claim is filed—may also be available. Reviewing the coverage time frame and maintaining continuous coverage are important considerations to keep in mind when deciding on a policy.
Key Benefits of Lawyers’ Professional Liability Insurance
LPL insurance can provide several benefits to its insureds. For example, it can offer:
- Financial stability in the event of a claim
- Coverage for public relations, crisis management services and other risk management support
- Enhanced client confidence and access to clients who require it
Additionally, some states require lawyers’ professional liability insurance, and other jurisdictions require notification to clients if a policy is absent or does not meet certain minimum limits. Maintaining coverage can allow insureds to avoid penalties and fines.
We can help.
LPL insurance can be a valuable investment for an attorney or law firm, and it can typically be tailored to meet specific needs. Contact us today for more information on this coverage and details on other insurance solutions.