At some point each year, your law firm endures the unsavory ritual of purchasing or renewing insurance. Each year means another application to fill out, and each application means more time and energy away from running your business.
Why is it that buying insurance is so obscenely difficult, confusing, and expensive — especially for law firms? Could it be that most firms are underserved by their current insurance brokers? Maybe, but we’ll get to that later.
First we must consider the extra risks a firm need coverage for, most notably legal malpractice (after all, practicing law get riskier as society gets more litigious). There are also perceptions of “deep pockets,” higher client expectations, and overworked attorneys — all of which increase the likelihood of malpractice allegations.
Adequate protection from a claim, warranted or not, can help ensure financial security, success and longevity. Law firms, therefore, need to insulate with an impeccable risk management plan.
Finding the right coverage for your firm
It comes down to three factors:
- Premiums: what’s the cost for adequate coverage from your risks?
- Broker experience: how well do they know the legal industry and your specific needs?
- Time: how long will it take to secure and manage those policies?
Embroker is here to make purchasing insurance smart, easy and cost-effective for everyone. To get you started on the right path, let’s consider a few points before you rush off to bind coverage:
A lawyer’s premiums go up as their exposure to risk and claims increases
Most new lawyers haven’t practiced long enough to make a mistake. Experienced lawyers, on the other hand, tend to be more vulnerable to errors due to less oversight, a longer history of cases, and higher stakes. According to the American Bar Association, lawyers in private practice for five years or less average around 3.5% of malpractice claims, compared to 37% for attorneys with 11-20 years experience.
When you recruit an experienced attorney to work at your firm, expect your firm’s insurance rates to increase. Also, the attorney billing 1,500 hours is far more prone to claims than the Of Counsel (OC) billing 600 hours.
Eventually, your rate per attorney becomes “mature” and each additional new hire does not affect premium. But don’t wait for that to happen. You can reduce premium costs right away by negotiating with carriers so that OC is NOT factored into your premium. A savvy broker who understands carrier underwriting is able to work these nuances in your favor.
Lawyers are highly exposed to gaps in their insurance coverage, especially with Professional Liability policies
Professional Liability insurance for lawyers is complex, and it requires an expert to help you make sense of it all. For example, in malpractice coverage, some underwriters offer a cheaper premium by not providing prior acts coverage, or — even more common — they present an extremely limited definition of “Professional Services” or “Claims.”
Coverage gaps are one way brokers often fall short of serving their clients. Make sure your broker can identify the gaps and on your behalf with multiple insurance carriers.
Other questions about gaps to consider:
- Are you double-insuring yourself by having a Crime Policy and Fidelity Bond?
- Have you coordinated your Cyber & Professional Liability Policies to know when each responds?
- If you hit someone during your drive to a client, which policy responds?
Embroker’s scrupulous approach to insurance review often uncovers a wide range of gaps and exposures... and we work accordingly with our clients and carriers to get those fixed.
Cyber Liability and Social Engineering policies are now more necessary than ever
Law firms have an unfortunate reputation for being easy to hack, making them appealing targets to data thieves. We’re not just talking about cracking a Twitter password — hackers can get access to large swaths of highly sensitive data like Personally Identifiable Information (PII), high-profile lawsuits, and key acquisitions.
Highly sensitive data yields a lot of power, and in the wrong hands could be leaked or sold to the media, an opposing party in a lawsuit, investors; anyone with a vested interest.
Large law firms were early adopters of Cyber Liability insurance, but it’s now standard for mid to small-sized firms to buy this coverage (and it’s still affordable).
By the way, how do you feel about that paperwork?
Probably hate it, right? Paperwork — all those mind-numbing forms, memos, calendars, contracts, applications — can consume or ruin your day...maybe even your life. And while you might possess a higher tolerance for client-serving paperwork, how many hours have you spent and/or lost on internal paperwork — including the insurance stuff?
We also hate paperwork at Embroker, and we’ve found a way to rid of some of it for you. Our online platform eliminates the burden of paper by turning all your insurance policies, certificates, claims, etc. into clean, easy-to-access digital documents. Kiss those file cabinet and papercuts goodbye.
Not sure if you’re getting a fair deal?
A frequent question we hear — and a common problem with insurance underwriting in general — is that no one is really knows how an underwriter arrives at a premium.
A law firm’s premiums are usually determined by number of attorneys, areas of practice, location, and claims. Most firms acknowledge this, but they still rarely understand how the price is actually derived.
Embroker believes in giving our clients better choices using data and transparency. We benchmark all of your policies against similar firms in your vertical, then procure multiple quotes from an independent broker. We also cross-reference your costs with firms of comparable size, policy limits, claims history, and risk tolerance.
Where would you like to start?
Legal professions like yours require unique insuring expertise and experience. Embroker helps you get the best coverage at the best price, and we start by performing a simple audit of your current policies. Beyond that, we also offer advice on risk management challenges such as loss control and risk financing.
Schedule a call with one of our brokers. It’s free and there’s no obligation.
First time buying insurance?
At minimum, law firms should purchase the following insurance: Professional Liability (aka Malpractice Insurance or / Errors & Omissions (E&O)) and Business Owner’s Policy (BOP).
- The BOP will protect legal business in much the same way a homeowner’s insurance policy protects your home and personal possessions. BOPs consist of three basic insurance coverages: business liability, business property, and business income policies.
- The Professional Liability Policy will protect your firm and you personally from claims all malpractice, which are commonplace today.
As your law firm grows, you will eventually broaden your insurance program to include additional policies like Cyber Liability, Errors and Omissions, and an Umbrella policy that extends the limits of existing coverage. All firms are unique. We suggest you consult with one of our experienced brokers to find the right mix of coverage for your business.
Don’t wait around for right coverage for your firm. Take charge now and reach out to Embroker. We promise to make your next insurance experience smart, easy and cost-effective.