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11 Professional Liability Insurance Questions You Need To Know The Answers To

Updated: May 25, 2018

Whether you’re running a solo law firm or a large firm, you may have the same questions regarding your Professional Liability Insurance. We have compiled a list of common questions and their answers to help you navigate the treacherous and frustrating world of insurance.

Please reach out to us if you have any additional questions and consider us your resource for any questions you might have regarding your commercial lines of insurance.

1: Why does my insurance cost so much?

Burns Brokers recommends that you look at the case values your firm is handling. The firm has an exposure on the value of the whole case, not just the commission that the firm may receive. Review your insurance values compared to the case values; these should be very similar limits.

2: As a solo firm why did I get declined from an insurance carrier?

Many insurance companies view part-time solo practitioners as an exposure and will simply decline to quote. Their filings are not made to quote a part-time firm and therefore, they are not eligible. Burns Brokers has several markets that like working with part-time, solo firms and also offer rate deductions to help lower premiums.

3: Our firms merged, what do we need to do with our insurance?

Merging or acquiring another law firm is time consuming and difficult. Burns Brokers will help to make it easy for you to make this transition. Since claims made policy forms have prior acts/retroactive dates, it is super important to ensure this coverage change is done correctly. It is very easy to do it wrong! If you merge firms with another company, you are often faced with many decisions. Do I bring my liabilities with me or do I purchase a “tail?” What insurance is the best for my firm and offers the best premium? We can help walk through your unique situation to make a recommendation. It is of the utmost importance to ensure your prior firm names have coverage. If you just simply change the name, you could be in a position where there is no coverage in place for the prior firm name.

4: I want to change my name, how do I ensure my old firm name has coverage?

Making a name change can be super easy to change on your insurance, but making sure it is done correctly is another story. We always recommend listing your prior name as a predecessor firm; this will ensure you have proper coverage for the prior name. Each carrier handles predecessor firms differently, we will ensure the listing is done correctly.

5: I have a potential claim, is there anything I can do now?

Having a potential claim can be scary and nerve racking. At Burns Brokers, we can help you discuss the claim, check if coverage will apply and figure out what to do next. Many of the insurance carriers we work with have pre-claim hotlines and risk management programs that we can help you get in touch with to move forward. Burns Brokers has ample experience in helping firms with claims, let us help you today.

6: What controls do you recommend I have in place to prevent a claim?

Deciding when to purchase an extended reporting period or “tail” can be very tricky! They are often expensive and time sensitive, so it is important to evaluate all of your options. Typically a tail is purchased when a firm closes their doors for good; however, there are many other instances where it might be in your favor to purchase a tail.

Deciding when to purchase an extended reporting period or “tail” can be very tricky! They are often expensive and time sensitive, so it is important to evaluate all of your options. Typically a tail is purchased when a firm closes their doors for good; however, there are many other instances where it might be in your favor to purchase a tail.

8: How quickly can I get my insurance in place?

Burns Brokers responds to each request for a quote promptly. We work based off of effective date, as do the carriers. If your renewal date is coming up quickly, it is never too late for us to try to obtain quotes for you. Whenever possible, we successfully secure policy forms for our clients within a 24 hour period!

9: Why do my premiums keep going up?

It is often frustrating when insurance premiums continually go up. However, since they are claims made policy forms, they are often very different than occurrence based policy forms. When your firm first opens its doors, the insurance carrier will assign a prior acts/retroactive date to your policy form. This means the carrier will provide coverage for covered errors that occur after this date. For each year your firm is open, the insurance company increases the coverage they provide to match the amount of years. After your one-year renewal, they are now covering your firm for the prior two years, so the premium will increase. This process is called step rating. Step rating is something that all professional liability carriers typically do for the first 5 to 10 years the firm has been in business. The step rating amount and length vary from carrier to carrier. However, the step rating also follows each lawyer, so if your firm hires a new lawyer, they will be going through step rating and you’ll most likely see an increase in premium for their portion of the premium for the next few years.

Once your firm has been insured for 5-10 years, you will have a ‘mature’ rating structure and the increases should level off (subject to change if area of practice changes, attorney changes, claims or rate increase from the carrier). It is important to have a knowledgeable broker like Burns Brokers who can help you understand why your premium is increasing. If it is due to an outside source, it might be time to switch to a different insurance carrier. We will help walk you through this process.

10: Can I sue clients for failing to pay their due fees to me?

Suing clients for failure to pay the firm their due fees is frowned upon in the insurance industry. The insurance carriers often receive counter suits for malpractice claims due to this and therefore, do not like them. Burns Brokers understand this is a difficult situation and that you deserve payment. We recommend changing your common practices such as enforcing strict fee agreements with adequate retainer fees to ensure the firm is paid. This will prevent the need for a fee suit. We do understand all areas of practice do not allow for a fee agreement.

Burns Brokers has many ideas on how you can help mitigate your exposure, let us help you find a plan of attack.

11: Do I need to add my independent contractor to my policy?

Yes! Most insurance policies require you to formally add independent contracts to the policy form, just like any other attorney, for coverage to be in place. Your policy form will only provide coverage for work the independent contractor does on behalf of your firm. If you don’t add them to your policy form, the firm will not have coverage for work the contractor does and has a major liability. Typically if the contract worker is working minimal hours, many insurance companies will not charge extra for them. Each carrier is slightly different, but we highly recommend you add all attorneys who do work for your firm to your policy.


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