Legal malpractice insurance, also known as legal professional liability insurance or errors and omissions insurance, offers valuable protection from unforeseen circumstances. While it is a good idea to seek an appropriate level of coverage, it is also important to note that malpractice coverage is optional in most states, and insurance requirements for lawyers vary from state to state.
Still, some scenarios may require coverage, even if it is not a state requirement. This post delves into various situations that may necessitate coverage and provides an overview of state regulations.
Do Lawyers Need to Carry Legal Professional Liability Insurance?
The answer is not black and white.
Most states do not require professional liability insurance for legal professionals, but a handful of states do. Additionally, a few states require a firm to carry specific limits dependent on its business formation, whether it is an LLC, LLP, etc. Furthermore, many states require a firm to disclose coverage status and levels to potential clients.
Professional Liability Insurance Requirements by State*
| Alabama | No insurance requirements. |
| Alaska | Lawyers must inform clients if their coverage is under $100,000 per claim or $300,000 aggregate (or if they're uninsured). |
| Arizona | There are no set coverage limits, but lawyers must indicate to the State Bar whether they possess insurance. |
| Arkansas | Coverage is not mandated, but lawyers must disclose their insurance status to the State Bar. |
| California | While coverage is not obligatory, disclosing insurance status to clients is. |
| Colorado | Malpractice insurance is not mandated, but disclosure to the Colorado Supreme Court Attorney Registration Office is required. |
| Connecticut | No insurance requirements. |
| Delaware | There are no set coverage limits; certification about insurance status is needed. |
| Florida | Coverage is not mandated, but attorneys must inform the Florida State Bar Association of their coverage status. |
| Georgia | No insurance requirements. |
| Hawaii | Coverage is not mandated, but attorneys must inform the Hawaii State Bar Association about their insurance status. |
| Idaho | Lawyers must have insurance coverage of at least $100,000 per incident and $300,000 aggregate. |
| Illinois | Coverage is not mandated, but upon license renewal, attorneys must complete a four-hour online assessment regarding their firm's operations and insurance status. |
| Indiana | No insurance requirements. |
| Iowa | No insurance requirements. |
| Kansas | Coverage is not mandated, but lawyers must disclose their insurance status to the State Bar. |
| Kentucky | No insurance requirements. |
| Louisiana | No insurance requirements. |
| Maine | Coverage is not mandated, but lawyers must disclose their insurance status to the State Bar. |
| Maryland | No insurance requirements. |
| Massachusetts | No insurance requirements. |
| Michigan | No insurance requirements. |
| Minnesota | Coverage is not mandated, but private practice attorneys must report their professional liability insurance status and provider. |
| Mississippi | No insurance requirements. |
| Missouri | No insurance requirements. |
| Montana | Coverage is not mandated. However, attorneys in the Lawyer Referral Service agree to have coverage. |
| Nebraska | Malpractice coverage is required, but there are no minimum limits mandated. |
| Nevada | No specific insurance requirements, but the State Bar website indicates whether attorneys have coverage. |
| New Hampshire | Firms must disclose if they lack coverage or have less than $100K/$300K. Clients must be notified if coverage is insufficient or terminated. |
| New Jersey | Private practitioners are not mandated to carry insurance. Limited Liability firms must have at least $100k (multiplied by the number of attorneys), and evidence of coverage must be registered. |
| New Mexico | Firms must inform clients if they lack insurance or possess less than $100K/$300K. |
| New York | No insurance requirements. |
| North Carolina | Coverage is not mandated, but lawyers must disclose their insurance status to the State Bar. |
| North Dakota | No insurance requirements. |
| Ohio | Attorneys must inform clients if their coverage is below $100K/$300K (or if uninsured). |
| Oklahoma | No insurance requirements. |
| Oregon | Attorneys must maintain $300K/$300K coverage through the Professional Liability Fund (PLF), a state-wide non-profit. |
| Pennsylvania | Firms must inform clients if their coverage is under $100K/$300K (or if it falls below those levels at any time). |
| Rhode Island | Insurance is only required if the attorney operates within a corporation, LLP, or LLC. |
| South Carolina | No insurance requirements. |
| South Dakota | While not mandatory, insurance status should be disclosed on letterhead if under $100K per claim. |
| Tennessee | No insurance requirements. |
| Texas | LLPs must have at least $100K unless they reserve an equivalent amount for judgment satisfaction. Otherwise, there are no insurance or disclosure requirements. |
| Utah | No insurance requirements. |
| Vermont | No insurance requirements. |
| Virginia | Insurance limits are not defined, but confirmation of insurance status is mandatory. |
| Washington | Coverage is not mandated, but lawyers must disclose their insurance status to the State Bar. |
| West Virginia | PLLCs must maintain $1M in coverage. The state bar site discloses each attorney's insurance status. |
| Wisconsin | No insurance requirements. |
| Wyoming | No insurance requirements. |
* The contents may not be an exhaustive list of state requirements. This list is current as of August 2024. Confirm insurance requirements, as some requirements may have changed.
Other Scenarios Requiring Insurance Coverage
If state jurisdiction does not require coverage, does that mean you are in the clear? Not necessarily. There are a variety of situations that attorneys may find themselves in that require legal professional liability coverage independently of the state requirements.
The type of work attorneys do will influence their need for coverage. For example, real estate attorneys are often required to have a certain amount of coverage to complete real estate closings on behalf of a lender. This regulation is independent of state requirements and can prevent attorneys from being able to provide services in this area of practice if they do not meet insurance requirements set forth by the lending institution.
Occasionally, a client may request a certain amount of coverage. Firms sometimes provide insurance defense services—for example, being required to carry specific limits by the insurance company to which they offer services. 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 malpractice case.
The above two examples are not exhaustive, so discussing potential requirements with your clients is essential. Often, clients will request coverage before engaging with the attorney.
What if My Firm Opts Out of Professional Liability Coverage?
Most states do not require legal professional liability coverage. However, even if those states do not require coverage, they may require disclosure of coverage status in one form or another.
Some states require disclosing coverage status when annual fees are due. In other states, you must notify clients if you do not carry coverage or have insurance below a specific limit of liability (typically $100,000 per claim and $300,000 aggregate).
Certain State Bar websites allow the public to search its member directory, where they disclose whether an attorney carries liability insurance.
For many clients, coverage status matters 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.
Securing Professional Liability Insurance
While the above table can be used as a quick reference, verifying requirements with your state bar and clients is crucial. State Bar sites can be beneficial, as many provide details about liability insurance.
Regardless of state rules, the best tactic is always to carry coverage. Not only can the coverage provide financial protection in the event of litigation against you or your firm, but opting not to carry coverage may cost prospective clients.
After you have determined your insurance needs, there are a few steps you can take to secure legal professional liability insurance coverage:
- Evaluate insurance carriers or insurance agencies
- Determine how much coverage you need to carry
- Compare insurance quotes and choose the policy for you
Still have questions about malpractice coverage? Get in touch with one of our experts.
