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Insured asks what is “Step Rating”?  Did not find term defined or mentioned in policy.

Response:

Lawyers Professional Liability Insurance policies are written “claims made” policy form.   Most Claims Made Policies are Step Rated.  Assuming no prior Lawyers Professional Liability Insurance coverage at inception or the 1st “claims made” policy there are no past acts to cover.  During the first few years of “claims made” coverage the exposure increases as each continuously renewed “claims made”  policy covers more years  of past acts.  The rates are increased to match the exposure over those first few years.  A term that is commonly called “Step Rating”.  Over the 1st 3 to 5 years, sometimes a little longer, it is a good rule of thumb that the premium will double from the 1st year premium.  This is true for any Lawyers Liability Insurance Policy with any insurance carrier.    At some point during the 1st few years, the firm becomes “fully rated”.

Once the firm becomes “Fully Rated”, then the only changes in premium should be because of claims history of the individual or the insurance carrier; changes in the areas of practice of the professional; and/or changes in the general insurance environment.

If you switch insurance carriers, the “Step Rating” does not start over as the firm should maintain it prior acts date. 

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