Professional liability insurance for lawyers is a type of insurance designed to repair damage that may be caused in the exercise of the profession. There are several aspects that should be analysed.
What to Consider in Professional Liability Insurance for Lawyers
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The Insured Sums of the Policy
The purpose of a professional liability policy for lawyers is focused on protecting the insured, whether an individual lawyer or a law firm, depending on the case, against different claims made by third parties in the exercise of the legal profession.
It is necessary to assess the guarantees for legal defence and bonds, advice required for matters such as witness statements or preparing reports in court proceedings, and the payment of legal and out-of-court costs in relation to each claim.
Insured Sums
In relation to insured sums, it is also important to consider payment of compensation for professional liability, within the policy limits, the sums to be contracted, the limit per claim, the annual aggregate limit and any sublimit included in the policy for certain guarantees.
Professional liability policies in any field, not only for lawyers, usually include other covers, such as employer’s liability, subsidiary liability, tenant liability and others. Their insured limits must also be reviewed.
- Policy Guarantees
Not all policies from all insurers include them, but some policies do include guarantees such as primary financial loss, loss or destruction of files, professional disqualification, claims against opposing parties, liability for employee dishonesty and, in some cases, liability arising from breaches of data protection regulations.
Deductibles
Professional liability insurance policies for lawyers tend to include a deductible. The amount is optional and means that, as the insured party, you will assume a minimum amount in the event of a claim. The higher the deductible, the cheaper the policy will usually be.
- Time Scope and Retroactivity
Here it is necessary to pay attention to which claims the insurer will handle depending on the dates when the event occurred, the date when the injured party makes the claim for damages, and the effective and expiry dates of the insurance policy.
In some cases, professional liability insurance for lawyers or other professions is taken out with unlimited retroactivity. In addition, if we change insurer, we must check whether we will be covered for claims made from now on but relating to events that occurred before the new policy came into effect.
For these types of questions, it is advisable to consult an insurance brokerage specialised in liability insurance for businesses.
- The Activity Must Be Included in the Policy
Our activity, in this case legal practice, must be correctly described in the professional liability policy. Many insurers have policy types adapted to the profession being covered: lawyers, doctors, property managers, judges, prosecutors, tax advisers, private detectives or industrial property agents. The policy must clearly specify the activity being covered.
In some cases, it is not always easy to choose the correct classification for the activity being analysed, and advice from the brokerage can be decisive. Complex common cases arise when a company or self-employed professional carries out several different activities.
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Exclusions
As with any type of policy, there will be a series of exclusions common to all policies, but in this case there will also be others specific to each type of activity.
These should usually be reviewed in the general conditions.
- Policy Deductible
It is completely normal for the liability policy of a lawyer, or any other professional, to include deductibles, but we must know what amount applies, because this is what we will have to assume as insured parties in the event of a claim.
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Experience and Specialisation of the Brokerage and Insurer
Both when receiving advice before taking out the policy and when dealing with any later need for queries, endorsements or changes, the fact that our brokerage is expert in this field will help. It will also be very important when a claim occurs.
When a claim is received, the quality of the insurer’s claims service will be fundamental in relation to the quality of the policy we have taken out. For that reason, it is usually important to ask our brokerage how each insurer performs at key moments and not to focus only on policy prices when deciding.