Shopping for professional liability insurance can be a stressful task. Between the multiple companies looking to gain your business and endless information, it’s easy to get overwhelmed.
You've done your research and chosen the insurance carriers you’d like to get pricing from. But after you get a quote on insurance, how do you know which is best?
After working in the legal malpractice insurance industry for over 5 years, I can tell you firsthand that there are many factors to consider when choosing an insurance policy.
It is easy to look solely at the price of an insurance policy and choose the cheapest one, but is that really your best option?
By laying out your options and knowing how to compare different types of legal malpractice coverage, choosing the right policy for you will be a breeze. There are a couple of important things to review before making your final decision.
Below you will gain a better understanding of how to review the limits of liability, additional coverages, subjectivities, endorsements, and prior acts date which can all be found on a legal malpractice quote.
When you get a quote for legal malpractice insurance typically the first thing everyone wants to review is the price. But, there is much more involved in an insurance quote than just the price.
Before you can evaluate and compare legal malpractice insurance quotes, you must be familiar with what is provided in a quote.
A quote letter will provide a variety of different things for your review. First, it will include the exact coverage amounts you will be receiving along with your deductible about. Most companies will offer multiple limits of liability and deductible options on a quote letter so it is very important to review it thoroughly.
The limits will show the per claim limit of liability, the aggregate limit of liability, and the deductible. Limits can begin at $100,000 per claim up to $1,000,000 per claim. With so many options many carriers will offer a range of options.
On top of the limits and deductibles, there are additional “add ons” such as claims expenses outside the limit of liability, annual aggregate, and first dollar defense. Each of these additional coverages will increase the premium. By understanding which each of these add on to your policy, it will help an attorney know if they should be added on.
Claims expenses in addition to the limit of liability (CEOL) - this would mean that the claims expenses would not erode the limit of liability if there were a claim.
Annual Aggregate – if this option is added to the policy the insured would only be responsible for paying the deductible one time per year regardless of how many claims there are
First Dollar Defense – if this option is added onto the policy it would only have the insured pay their deductible if they are found liable. If they are no liability in a claim they would not need to pay their deductible.
The next feature of a quote letter someone should look for is the prior act's date. This is one of the most important things to review before binding your coverage.
The prior acts date is the date when they first acquired coverage and has since continuously held coverage, with no lapse in between policy periods.
A prior acts date is incredibly important for attorneys. If an attorney lets their prior acts lapse then they are losing all of their prior coverage.
It is very important to confirm your prior acts date is correct on all insurance quotes you receive.
On a quote letter sometimes a carrier will list subjectivities. For example, the quote could be subject to additional information on the firm. By spotting the subjectivities and getting them cleared up will make the binding process easier.
Finally on a quote letter typically the carrier will list all of the endorsements that will be included with your policy. An endorsement is an amendment to an existing insurance contract that either adds or modifies coverage.
Some endorsements that may be included on a legal malpractice insurance quote are cyber coverage, state-specific forms, and claims expenses outside the limit of liability. By reviewing the endorsements carefully you will better understand the additional coverages that are being added to your professional liability policy.
Everything listed above is an important feature that you would find on a professional liability quote. If you have received quotes from multiple carriers you will need to compare and contrast each one to determine which option is best for you and your law firm.
The first part of a quote you should look at is the limits of liability and deductible options. As mentioned previously, insurance quotes will oftentimes have a variety of limit and deductible options listed. It is best to first determine how much coverage is appropriate for your law firm and then take a look at the options you have been presented by each insurance quote.
Once you determine which limit of liability you want to go with you can then move on to the policy additions. Once you begin adding on the additional coverages you will get a better idea of the overall premium amount and be able to compare policies based on the cost for the level of coverage they are offering.
The next step is to make sure the rest of the information listed on your legal malpractice quote is correct. It is especially important to verify the prior acts date. If the date is not correct on the quote it will not be correct on your policy.
A prior acts date will show how far back the carrier is going to cover your work. If you do not have this date correct then there could be lapses in coverage. A lapse in coverage would mean claims that occurred during that time would not be covered.
Next, it’s time to review all the endorsements listed. If you do not understand an endorsement just ask. All carriers should be able to provide you with a copy of the endorsement for your review.
Finally, you should double-check that quote to make sure there are no subjectivities.
After reviewing all aspects of the quote you can finally make your final decision. Though it can be challenging to review multiple companies' quotes, it's so important to put in the work. By double-checking all of this information, it will ensure you are getting the best quote with all of the right coverages.