4 Questions To Ask Before Taking Legal Malpractice Insurance
4 questions to ask before taking legal malpractice insurance
Almost five to six percent of all lawyers have to face a malpractice claim every year because of disgruntled clients who are unhappy with the outcome of a case or due to legally unethical services rendered by a lawyer. Legal malpractice insurance provides coverage against such professional liability risks. Most of the time, these risks can include clients suing their attorney or law firm for a wrongful act or professional negligence.
Whether such claims filed by clients are ethical or not, dealing with such cases can consume a lot of time and money. Legal malpractice insurance will cover the cost of hiring an independent attorney and other legal fees required to defend against claims of legal malpractice. Read on to know more about legal malpractice insurance.
Why should you have legal malpractice insurance?
- Legal malpractice insurance is mandatory for attorneys and lawyers in several states. If you are a lawyer or attorney practicing in states like North Carolina, Nebraska, Virginia, or Delaware, you will require legal malpractice insurance. However, states such as Massachusetts do not require practicing lawyers and attorneys to have any malpractice insurance.
- Whether you are in a state that requires you to have legal malpractice insurance or not, it is advisable to be covered against professional negligence claims as this will not only give you peace of mind but also help in risk management in your practice.
- Before hiring the services of a lawyer or attorney, many clients often check whether the lawyer or attorney has legal malpractice insurance. Insurance against legal malpractice assures the client that the lawyer or attorney is legitimate and follows ethical procedures, helping build client confidence.
- In case there has been an ethical complaint against a lawyer or attorney, legal malpractice insurance will cover all the additional cost of hiring an independent legal counsel.
What does legal malpractice insurance cover?
- Legal malpractice insurance gives coverage against claims of professional negligence or wrongful acts committed while providing legal or professional services by an attorney or a law firm. Malpractice insurance will provide claims expense as well as indemnification coverage.
- Legal malpractice insurance will provide coverage for services offered as a notary public and services offered as a title agent. Attorneys who act as executor or trustee of an estate for a client or as a member, officer, or director of an association of legal professionals can also receive coverage with legal malpractice insurance.
- Legal malpractice insurance does not cover fraudulent acts, malicious acts, criminal acts, dishonest acts, services given to a business controlled or owned by the attorney who is insured against legal malpractice, services offered as a fiduciary as stated by the ERISA Act 1974, and other such acts.
How much does legal malpractice insurance cost?
- The premium for legal malpractice insurance for low-risk legal practice areas is around $300 to $500. There can be an increment in the premium paid over the span of the first 5 to 7 years of practice.
- A fully rated policy may cost between $1200 and $2500 on a yearly basis. This range is an estimated minimum liability limit.
- The premium increases as the risk of practice area increases. The estimated minimum liability limit of premiums for attorneys practicing in higher risk areas is between $3000 and $10,000 approximately.
Which factors affect the cost of legal malpractice insurance?
- One of the primary factors that affect the cost of the premium is the area of practice. Legal areas of practice such as insurance defense and criminal law have the lowest premiums. Areas such as intellectual property, security placement, and class action work have the most expensive insurance.
- Another factor that affects the price of the premium is the location of the attorney or law firm. States such as California, Texas, and New York have higher costs of premium. States that have a lower cost of living will have lower premiums for legal malpractice insurance.
- The experience of an attorney or the number of years a law firm has been in service also affects the cost of the premium. A new lawyer will have to pay more premium than a seasoned lawyer. The insurance premium will decrease as one’s relationship with the insurance company develops over the years.
Tags: legal malpractice insurance
Disclaimer:
The content provided on our blog site traverses numerous categories, offering readers valuable and practical information. Readers can use the editorial team’s research and data to gain more insights into their topics of interest. However, they are requested not to treat the articles as conclusive. The website team cannot be held responsible for differences in data or inaccuracies found across other platforms. Please also note that the site might also miss out on various schemes and offers available that the readers may find more beneficial than the ones we cover.
