All posts with the tag 'pli for law firms'

Popular Blogs on Lawyers Professional Liability

Posted in 2012 by AFPD

There are so many facets to professional liability coverage for law firms, we wanted to take a look back at some of our most popular blogs on lawyers PLI. Though professional liability insurance is imperative for lawyers and professionals in many industries, there is a lot of variability and flexibility in the amount and types of coverage available. This is why it’s so important to understand the amount and type of protection your firm needs.

Lawyers Professional Liability: Deductibles

Posted in 2012 by AFPD

Legal professional liability, like all types of insurance, is based upon a deductible. Deductibles determine the amount due prior to coverage engaging for a given period, and there are usually a number of different deductibles available for a given plan. Deductibles for law firm PLI can vary not only in quantity but by coverage type (judgments, settlements, fees, etc.)

Typically smaller deductibles yield higher premiums, as the insurer coverage kicks in sooner. Identifying an appropriate deductible requires critical thinking about how often you or your firm is sued for malpractice. The smaller the average claim, the lower your deductible will need to be in order to effectively reduce your total costs. For firms sued infrequently, a higher deductible can save money as a result of considerably lower premiums. Depending on claims history, insurers may limit deductible choices.

Law firm professional liability deductibles usually apply to defense costs, judgments, and settlements. A number of insurers offer deductibles that apply to judgments and settlements exclusively, known as a loss-only deductible. Premiums for loss-only deductibles are higher because the insurer must pay all defense costs. If your career or firm history indicates that cases will often be resolved in your favor, and your greatest concern is legal fees for each time such a claim is brought, loss-only deductibles will typically be the best option.


Liability Insurance and Prior Representation

Posted in 2012 by AFPD

Most professional liability legal malpractice policies provide claims made and reported coverage. This connotes that coverage may apply to claims reported to the insurer within the period of the policy, even if the activity giving rise to the claim occurred prior to the inception of the policy period. It is not unusual for claims to arise months or even years after the activity under litigation. Insuring on a claims made and reported basis allows insurance carriers to more effectively estimate potential risk and loss, thereby underwriting more accurately. To minimize the frequency of difficult situations, insurers typically limit activities a claims made and reported policy will cover. This is typically done through designation of what is called a prior acts date, set by agreement between the carrier and the policyholder. Claims arising from activity occurring prior to the prior acts date will not be covered regardless of the timing of the policy’s in-force period.

This is just one important reason to maintain continuous coverage when actively practicing, because only an in-force policy can provide coverage when a claim arises. The fact that you may have had a policy in force at the time you performed the services giving rise to the claim will not help mollify the risk if you do not have coverage in place at the time the claim is actually made. Lapses in coverage can occur when a lawyer moves from one firm to another, suspends their practice, or switches carriers. One way to avoid such lapses is to stick with one insurer over the years. An alternative is to purchase tail coverage, extending coverage beyond the initial policy year. An extended reporting period can also allow legal professionals extra time to report claims to the insurer made while a prior policy was in force.