Critical Questions to Ask Before Purchasing Legal Malpractice Insurance

The American Bar Association (ABA) estimates 80% of attorneys will defend against a malpractice claim at some point in their careers. And small or solo firms are disproportionately targeted, with 70% of all malpractice suits aimed at firms with five or fewer attorneys. That is why legal malpractice insurance is critical for small and solo firms, even though it is not strictly required in most states.  

Whether you are purchasing your firm's legal malpractice insurance policy for the first time or renewing your policy for the 100th time, there are many moving parts to understand.  

Just like with any big decision for your business, you want to make sure you are doing your due diligence and getting the answers to all your questions before you make the final call. 

The team at Protexure Lawyers has put together a list of critical questions you should ask yourself, your potential legal malpractice insurance carrier, and that the insurance company may ask you, to help determine if they are the right choice for your law firm (and vice versa). 

Questions to ask your firm 

These questions prepare your firm to help complete an insurance application. The more thorough an insurance application is, the greater the potential to save money on the premium. Additionally, once you finalize with an insurance carrier, these applications become an official part of your policy, so they must be accurate. Applications can be lengthy, so only apply to your top several choices of carriers you are seeking quotes from. 

• How much coverage do I need?
  • Key elements that affect coverage include the area of law practice, the location of practice, legal experience, and the status of a solo attorney.
• What legal malpractice insurance carriers are available in my area?
  • Consult ABA’s directory or other global directories to find qualified carriers in your area.
• What is my budget for liability insurance?
  • It can be tempting to go after the cheapest policy. However, high deductibles and defense-only coverage can leave your firm exposed. Carefully balance costs, risks, and other factors when selecting a policy and carrier.

Learn more: Why Every Attorney Should Carry Malpractice Insurance for Lawyers  

Questions a carrier may ask you 

Here are a few questions insurers may ask to help determine your firm's risk profile, tailor your coverage, structure a quote, and ultimately approve or deny your application: 

• What are your areas of practice? 
  • Certain areas, such as real estate or personal injury, may have higher premiums due to increased risk.
• How long have you and your firm been practicing law?
• What internal systems and protocols do you have in place to prevent administrative errors and avoid potential claims?
• Have you or your firm experienced client disputes, grievances, or malpractice claims? If so, what was the outcome?
• Do you currently have any cases or matters that another insurer currently covers?
• What is your firm's current caseload, and what is the typical value of the cases you handle?
• Do you handle any pro bono cases, and if so, how are they managed and insured? 
  • Many malpractice policies do not cover pro bono cases.

Questions to ask a potential insurance carrier 

While cost is an important consideration, it is only one of many factors. The core question should be, what are my insurance dollars actually buying? 

Insurance carrier or agency 

These questions help you evaluate a potential insurance firm's reputation and financial viability. 

• What is the reputation of the insurance carrier or agency?
• What is the carrier's AM Best Rating?
• How long has the carrier been in business?
• How long have they been writing professional liability coverage?
• How many law firms does the carrier insure?
• Is the Insurer admitted or non-admitted?

Price

The financial aspect of your malpractice insurance policy is a key consideration. It encompasses various elements directly impacting your immediate budget and long-term financial security. Understanding these components is crucial for an informed coverage decision. 

• Have these rates remained stable in recent years?
• Will my premium increase if I have a claim?
• Can I finance my policy?
• How much does financing cost?
• What, if any, premium credits does your company offer?
• What factors are considered in your pricing?
• How much does tail coverage cost?

Learn more: How Much Does Professional Liability Insurance Cost for Solo Attorneys? 

Policy/Coverage 

Knowing the specifics of your policy can help you stay calm when a claim comes in and help you know exactly what to expect.

• Does the policy cover my prior acts?
• How is the policy different from what I have currently?
• What doesn’t your policy cover?
• Does your policy have a hammer clause?
• Does the coverage cover disciplinary/regulatory matters?
• Does the policy have any provisions about a free extended reporting period?
• Who is covered under my policy?
• What optional coverage options do you offer?
• How much coverage do I need?
• Is it mandatory to have coverage in my state?
• How many years of step rating are there with your company?

Claims handling  

Asking about a carrier's claims handling process can help you understand how they manage and resolve claims, which is crucial for a smooth experience if you ever need to file one. 

• How do I report a claim?
• When should I report a claim?
• What is considered a claim?
• How are claims handled?
• Do I get to choose legal representation for a claim?
• How is the claim handling team picked?

Risk management 

Consider these questions to understand the carrier’s approach to helping you mitigate risks and providing support: 

• What risk management services does the carrier provide?
• Does the company provide sample engagement letters?
• Do you have online resources available?
• Is there someone who can advise on a potential claim?

Other

Below are some other general questions you should ask a potential insurance carrier: 

• How long does it take to complete your application?
• What is the renewal process like?
•  Do you have agents available to call if I have questions?
• How quickly can you provide me with coverage?
• (For agents/agencies:) Do you shop coverage with multiple carriers?
• How long does it take to get a quote?

Protect your firm with Protexure's legal malpractice insurance

Obtaining and maintaining a legal malpractice insurance policy is an essential business requirement for any law firm. The advantages of safeguarding your firm significantly outweigh the expenses involved. 

Protexure is committed to guiding you through the often intricate world of legal malpractice insurance. We understand that every firm has distinct needs and challenges, so our mission is to help you find the most suitable policy tailored specifically for your practice.  

Learn more about our legal malpractice insurance and contact us with any questions.