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Malpractice Insurance for Attorneys

Malpractice insurance for attorneys is a special form of coverage that will compensate them when mistakes are made that result in a lawsuit. For example, if an attorney advises a client to do something that will result in legal trouble or damages, the client has the ability to file a malpractice lawsuit. Insurance covers most of the fees that an attorney must pay from such a lawsuit.

This form of insurance is commonly referred to as "professional liability insurance." It should not be confused with regular liability insurance, which doesn't provide coverage for incidences resulting from negligence. Only professional liability insurance compensates negligent acts. There are limitations to compensation, though.

Malpractice Insurance for Attorneys - How Does It Work?

The way this insurance works is similar to automobile liability insurance. There is an amount covered for specific incidences, based on a maximum dollar amount. For example, a policy for an attorney that is written as $100,000/$300,000 would cover $100,000 per incident, with a total of $300,000 for the policy's cycle. If amounts are based on an annual allowance, then $300,000 would be the annual limit. Any lawsuits exceeding that amount may put the attorney's personal assets in danger, depending on how their business is set up.

Malpractice insurance for attorneys isn't universal throughout different companies. Some companies offer the attorney the opportunity to decide whether or not a lawsuit should be considered an "incident" and receive coverage. Most companies decide whether or not the lawsuit constitutes an incident that must be covered, based on their specific rules. The underwriting agency also plays a key role in making rules.

Malpractice Insurance for Attorneys - What's the Cost?

Insurance can be purchased individually by an attorney operating a solo practice. It can also be purchased by law firms. Some insurance companies offer lower rates to law firms with more than 2 attorneys. Solo rates usually cost at least $1,500 or more for a good policy. These rates are based on the assumption that an attorney hasn't had prior lawsuits that resulted in insurance claims. While insured, if a lawyer has multiple claims filed, this will greatly raise the amount of the premium.

Specialists in the insurance business are able to help new attorneys purchase a thorough policy. It is important to heed their advice to have the best coverage possible. What is considered "best" may be different for each attorney, based on the field of specialty they're in. Malpractice insurance for attorneys is something these professionals cannot afford to avoid purchasing.

Last modified: May 15, 2011