Attorney Malpractice Insurance Carriers that are not licensed to write in all states many times decline to write coverage for Law Firms that have clients in states that the insurance carrier is not licensed. With some carriers, even one client in the wrong state will be cause for a declination to issue a policy.
The reasons for this are:
1. Attorney Malpractice carrier generally do not have panel counsel in that states not licensed
2. Lawyers Professional Liability Insurance carrier used to write business in that state but has since withdrawn, because of poor results. This can be due to the legal climate perceived in that state or just poor underwriting results. Either way insurance carrier wants nothing to do with handling claims in a particular state.
3. Malpractice carrier is concerned that the law firm may not understand the law in other states and this could result in additional attorney malpractice exposures.
4. Law firm may also have an office in a state that the malpractice carrier is not licensed in and has large percentage of their business coming from this state.
5. Malpractice carrier is comfortable with very small percentage of the law firm’s work coming from another state, but likely will ask additional questions as to the type of work performed and percentage of this work in another state.
For certain law firms that run into this problem, best solution is to align themselves with a malpractice insurance carrier that is licensed in all of the states that the law firm does business in. This may or may not be the least expensive policy premium option, but likely is the best insurance coverage solution.