As shared in last month’s issue, I am continuing with examples of how you can make certain that you are properly protected on your Lawyers Professional Liability.
If you want to protect your safety at work or that of your business from the many threats you could possibly face, the idea of looking into insurance companies through sites such as www.constructaquote.com could help you make a decision when it comes to finding the right form of insurance for your business. As protecting yourself and your company should be your top priority, this is a good starting point to covering your back in case anything was to happen.
Why, you may ask? That is because too often the enemy of being great is simply being good versus being awful. In this case, maybe take a look here if you’re wondering how much does public liability insurance cost? In fact, if something is perceived to be good or good enough then it is often deemed acceptable. Yet if you’re reading this article, my feeling is that you are a person that does not settle for the status quo.
See in our litigious society, too many excellent law firms have had allegations of malpractice made against them. Lawyers Professional Liability insurance policy form language is critically important. It can mean the difference between whether your insurance company will pay claims that may result.
You need to know that not all Lawyers Professional Liability (LPL) insurance policies are created equally, and even if the policy under consideration does not contain the policy language and coverage that you desire, you can negotiate the coverage that you need, sometimes at little to even no additional cost.
Continuing on again from last month’s issue as follows are so more excellent example of what to look for to make certain that you are properly protected on your Lawyers Professional Liability.
Deductibles—Very Much The Difference Maker
Almost all LPL insurance include a policy deductible. Typically, insurers seek deductibles in the range of $2,500 or more per attorney in a firm. Deductibles also vary by the liability coverage limits sought by law firms. If your law firm is willing to accept a larger deductible, only then will a carrier offer to provide higher liability coverage limits. For example, if your firm desires a $5 million limit, rarely will your insurer allow for a deductible of less than $10,000.
Since a deductible is incurred first in any claims scenario, it has an immediate impact on your firm’s finances in the event of a claim. Yet there are many optional endorsements available that lessen the negative impact of a deductible on your law firm. Some of these optional endorsements are offered for additional premiums, and others are offered for free as you’ll read about in the next section.
Aggregate Deductible— Stop the Hemorrhaging
Most insurers offer “aggregate deductibles.” Most LPL policies are written with a “per claim” deductible, meaning that the deductible will apply to each and every claim experienced by your law firm in the policy year.
Since claims are relatively rare, per claim deductibles are satisfactory for most claims scenarios. However, sometimes situations will arise were your firm could experience what is known as “serial claims” as the result of some error that is usually a technicality which will have impact across a large volume of clients.
For example, if your law firm has an employee that has been engaging in collection activities against a large volume of debtors on behalf of one of your clients and your employee’s practices violated the federal Fair Debt Collection Practices Act, or its state equivalent, then a separate deductible would apply to each claim against the firm.
So if your deductible was $2,500 per claim, and the damages claimed by each third party amounted to $2,000 then your insurer would not pay any damages because a separate $2,500 deductible would apply to each and every claim, even if there were hundreds of claims against your firm amounting to hundreds of thousands of dollars lost by your firm. NOT GOOD!
Yet, aggregate deductibles are particularly important to your law firm as who wants to pay a large number of deductibles within the same policy year? Of course your law firm can pay your selected deductible and is why you chose it, but if your firm experienced five claims in a given year, would it pay five times your annual deductible?
So make certain that you have an aggregate deductible per claim endorsed onto your LPL policy which is usually done at a nominal charge.
Loss Only Deductibles— Pay Only If You Are Liable
Most insurers also offer “loss only deductibles,” also known as “first-dollar defense” coverage. As the name implies, a law firm’s deductible only applies if you are found to be negligent and a claim is made by your insurer on behalf of your firm. And the best part is that your deductible does not apply to defense costs. This coverage is attractive because defense costs are the first costs that your law firm incurs in a claim, and with meritless claims, usually law firms incur only defense costs.
This optional endorsement is available for an additional premium, but it is also subject to your insurers underwriting standards. If your firm and its area of expertise in your practice has shown a propensity for facing a large number of small claims or incidents, most likely your insurer will decline to offer you this option. In other words, the underwriter may determine that the additional premium that they will incur will not likely offset the costs that they will incur by defending your firm from the first dollar.
The amount of additional premiums for both the “loss only deductible” and the “aggregate deductible” optional endorsements varies by the size of the deductible. Also, each insurer has its own unique pricing structure for these options. It is recommended to get alternate quotes for these options so that you may make the best decision for your firm.
Deductibles and Coverage Enhancements—The Fine Print Means Big Dollars
Over the years, several coverage features that were added to LPL policies to make them more competitive have been gradually adopted into most insurers policy forms. However, while some insurers have added these enhancements, they have not made corresponding changes to how their deductible for these enhancements work.
In other words, if a policy deductible still applies to these enhancements, then their value is greatly diminished. It is not always apparent if the deductible applies to these coverage enhancements or not. Here is a brief overview of some of these coverage enhancements.
The market for LPL insurance is usually very competitive. It is your firm’s financial health and reputation that is on the line. A good LPL insurance policy should not be viewed as “good enough.” It is worth your time to read the policy, ask for what you want, and realize the coverage that you need.
An expert LPL insurance broker is your advocate in this process and can greatly aid you in this process. So be as detailed as possible to allow the expert LPL insurance broker help craft coverage enhancements that you need and want as ultimately, it is your firm’s responsibility to make sure that you have great coverage in place.
In next month’s issue will continue to share with you excellent Lawyers Professional Liability “insurance insider secrets guaranteed to plug all fatal gaps in your Lawyers Professional Liability insurance protection.