Three Things to Know about Legal Liability Insurance

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Hopefully, as a legal professional you already have some idea of how much legal malpractice coverage you need and know the basics of how to evaluate a policy. Sometimes, though, even lawyers are hazy on the ins and outs of insurance if it’s not part of their practice area. So, we thought we would arm you with a few basic must-know facts and concepts related to professional liability insurance. Obviously this is not a substitute for a conversation with a qualified legal insurance professional any more than a short article on “Five Things to Know about the Tax Code” could substitute for a conversation with a tax attorney!

What’s the difference between errors and omissions (e & o) coverage, professional liability insurance and legal malpractice insurance?

The difference is largely the name. The terms are frequently used interchangeably. Professionals of all stripes, not just lawyers, can purchase errors and omissions coverage. A web developer who accidentally crashes a client ‘s site on Black Friday, for example, might be sued for sales losses. Win or lose, the case will be expensive and e & o coverage can protect you. In most professional practices it’s simply known as e & o, but doctors usually call it “malpractice insurance”, engineers call it “professional liability insurance” and lawyers might choose either one. It is possible to write a policy that is narrowly defined and focused specifically on errors due to negligence (this might be considered “malpractice”) or broadly on all errors and omissions. At Nielsen and Geenty, we can write whatever policy suits a particular legal practice according to the needs and exposures of the attorney.

Is professional liability insurance required for lawyers in California?

While lawyers in California are not required to carry insurance, they are required to notify clients if they do not have insurance. Rule 3-410 of the State Bar of California Rules of Professional Conduct states:

A member who knows or should know that he or she does not have professional liability insurance shall inform a client in writing, at the time of the client’s engagement of the member, that the member does not have professional liability insurance whenever it is reasonably foreseeable that the total amount of the member’s legal representation of the client in the matter will exceed four hours.

If you don’t have professional liability insurance, not only might clients understandably choose a different attorney, you’ll be putting yourself at risk of losing your livelihood. If you need insurance, fill out our online quote form or give us a call at (877) 856-9231. We can help.

How much does professional liability insurance cost?

Unlike off-the-shelf insurance products like car insurance or health insurance, an attorney’s liability coverage must be tailored to the specific practice and specific needs. In recent years real estate transactions have seen a significant rise in legal malpractice claims, for example. And even within a field, there is obviously great variation between a lawyer working out contracts for residential houses and a lawyer drafting contracts for skyscrapers. Any accurate quote requires a consultation with an insurance broker with detailed knowledge of your practice. That’s why we ask for so much information in our online quote tool. We want to get you the best possible quote for your legal practice.

Nielsen & Geenty Insurance Services Inc. is a boutique insurance brokerage that specializes in lawyers professional liability insurance. The firm offers legal malpractice insurance, errors and omissions insurance, workers compensation insurance and office package policies.

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