When it comes to legal malpractice insurance, at some point or another you’ve probably asked yourself, do I really need to make this investment?
As an underwriter of legal malpractice insurance, I encourage every lawyer to have insurance. Legal malpractice insurance has many benefits but protection from the unknown makes filling out a tedious application once in a while worth it.
While I could go on and on about why you should have insurance, the question I want to address is whether you are required to have insurance.
Unfortunately the answer here is not simple. There is no blanket law or regulation that requires lawyers across the country to have insurance coverage. Instead, insurance requirements for lawyers vary from state to state.
There are even some different scenarios where you may be required to carry coverage, but not as a requirement of the state. We will explore some different scenarios that may impact whether you need to carry coverage and even provide a synopsis by state.
As stated previously, this answer is not black and white.
There are many states that do not require you to have any coverage at all. There are very few states that absolutely require that you do carry coverage. There are a few states that require a firm to carry certain limits dependent on their business formation, whether it’s an LLC, LLP, etc.
You can use the table below as a quick reference for your state’s requirements.
|
Alabama |
No requirement |
|
Alaska |
Must notify clients if less than $100/$300 (or no coverage). |
|
Arizona |
No minimum limits – requires certification whether insurance is carried or not |
|
Arkansas |
No requirement |
|
California |
Not required to carry; required to report to client whether they carry coverage |
|
Colorado |
Not required to carry; required to report to Colorado Supreme Court Attorney Registration Office whether they carry coverage |
|
Connecticut |
No requirement |
|
Delaware |
No minimum limits – requires certification whether insurance is carried or not |
|
Florida |
Not required to carry; required to report whether insurance is carried or not |
|
Georgia |
No requirement |
|
Hawaii |
Not required to carry; required to report to Hawaii State Bar Association whether they carry coverage |
|
Idaho |
Required to carry limits of $100,000 per occurrence and $300,000 as an annual aggregate |
|
Illinois |
Not required to carry; require attorneys who do not carry malpractice insurance to complete a four-hour interactive, online assessment of the operations of their firm |
|
Indiana |
No Requirement |
|
Iowa |
No Requirement |
|
Kansas |
Not required to carry; required to report whether insurance is carried or not |
|
Kentucky |
No Requirement |
|
Louisiana |
No Requirement |
|
Maine |
No minimum limits – requires certification whether insurance is carried or not |
|
Maryland |
No Requirement |
|
Massachusetts |
No Requirement |
|
Michigan |
No Requirement |
|
Minnesota |
Require attorneys in private practice whether they carry professional liability insurance and the name of the provide |
|
Mississippi |
No Requirement |
|
Missouri |
No Requirement |
|
Montana |
No requirement; Lawyer Referral Service attorneys do agree to carry coverage |
|
Nebraska |
No minimum limits – requires certification whether insurance is carried or not |
|
Nevada |
No requirement; Bar site shows whether attorneys do/don’t have coverage |
|
New Hampshire |
Required to disclose if firm has no coverage/less than $100k/$300k in coverage. Must let clients know if coverage is terminated or if coverage drops below $100/$300 |
|
New Jersey |
Not mandated for private practitioners. Limited Liability firms must carry $100k (multiplied by No. of Attorneys). Required to register evidence of the coverage carried. |
|
New Mexico |
Not required. Inform client if no coverage in place or less than $100/$300k |
|
New York |
No Requirement |
|
North Carolina |
No minimum limits – requires certification whether insurance is carried or not |
|
North Dakota |
No Requirement |
|
Ohio |
Must notify clients if less than $100/$300 (or no coverage). |
|
Oklahoma |
No Requirement |
|
Oregon |
Required to carry $300k through Professional Liability Fund (PLF) |
|
Pennsylvania |
Firms must notify clients if they carry less than $100/$300 (or if coverage drops below this at any time) |
|
Rhode Island |
No requirement except if the attorney is practicing in a corporation, LLP, or LLC. |
|
South Carolina |
No Requirement |
|
South Dakota |
Disclosure required on letterhead if they have no malpractice insurance of if coverage is less than $100k per claim |
|
Tennessee |
No Requirement |
|
Texas |
LLPs are required to have $100k if they do not set aside this amount to satisfy judgements. Otherwise, no requirements to carry or inform clients |
|
Utah |
No requirement to carry or disclose to clients |
|
Vermont |
No Requirement |
|
Virginia |
No minimum limits – requires certification whether insurance is carried or not |
|
Washington |
Not required to carry; required to report to WSBA, whether they carry coverage |
|
West Virginia |
PLLCs required to carry $1M. No requirements otherwise. Disclosed on state bar site for each attorney. |
|
Wisconsin |
No Requirement |
|
Wyoming |
No Requirement |
* Contents contained therein may not be an exhaustive list of state requirements. State Requirements as of Dec 2020. Confirm insurance requirements as some requirements may have changed.
So, your state or jurisdiction doesn’t require that you carry coverage – does that mean you’re in the clear? Not necessarily. There are a variety of situations that an attorney may find themselves in that require liability insurance independent of the state requirements.
One situation we often see is attorneys being required to carry coverage dependent on the type of work he or she is dealing with. For example, real estate attorneys are often required to carry a certain amount of coverage in order to complete real estate closings on behalf of a lender. This is independent of state requirements and can prevent attorneys from being able to provide services in this area of practice if they don’t meet insurance requirements set forth by the lending institution.
There are also situations wherein a client may request that you have a certain amount of coverage. We see a lot of firm’s providing insurance defense services, for example, being required to carry certain limits by the insurance company they provide services for. Of course, it is not limited to just that area of practice, but many clients feel more comfortable knowing there is a safety net should there be a case of malpractice.
The above two examples are not an exhaustive list of different scenarios that may require you to carry coverage, so it is important to discuss any potential requirements with your various clients. Oftentimes, these clients will request the coverage prior to engaging with the attorney.
You may have noticed that some states do not require you to carry professional liability coverage. However, even if those states do not require you to carry coverage, they may require you to disclose your coverage status in one form or another.
For some states, you may be required to disclose your coverage status when your annual fees are due. In other states, you may be required to notify your client that you either don’t carry coverage or have insurance below a certain limit of liability.
Certain State Bar websites even allow the public to search its member directory where they disclose whether an attorney carries liability insurance.
For many clients, whether an attorney carries professional liability insurance is on their mind when choosing an attorney to take on their case. While states may not require insurance, there are many reasons other than “requirements” to obtain professional liability coverage.
By this point, I’m sure you’re aware that there are a multitude of different requirements as far as your legal malpractice insurance.
While the above table can be used as a quick reference, it’s important to verify your requirements with your state bar and/or clients. Bar sites can be very useful as many provide details about liability insurance.
Regardless of whether you’re required to carry malpractice insurance, the best route is always to carry coverage. Not only can the coverage potentially protect you financially, but opting not to carry coverage may cost you prospective clients.
After you have determined your insurance needs, there are a few steps you can take to secure professional liability insurance coverage: