Lawyers chose to go without malpractice insurance believing because they work for a small firm and maintain close relationships with their clients they are immune to claims. Other attorneys believe that the chances of them facing a claim aren’t great enough for them to purchase a Lawyers Liability Malpractice insurance policy. The logic flaw is small firm lawyers have malpractice claims just like their more high profile peers in larger firms. If a malpractice claim goes to trial the lawyer can expect to pay over $75,000 just for defense costs. Good news is that malpractice claims happen with less frequency and severity for small firm lawyers that do maintain a close relationship with their clients. Normally small firm lawyers pay less than their large firm peers because of this.
Attorney malpractice insurance costs vary widely. No two attorneys are going to pay the same premium for their coverage. Law firms are insured as an entity with the cost generally on a per attorney basis. The key premium rating factors are claims history; areas of practice; number of years maintaining claims-made coverage; limits; and location.
The costs for different areas of practice can be 5 to 10 times from one area of practice to another. Criminal Law and insurance defense firms generally pay the least; with Securities Placement, Class Action Work and Intellectual Property firms paying the most.
For full-time attorneys with no coverage and no claims history expect to pay between $300 to $1000 for the 1st year of coverage depending on limits and areas of practice per attorney. By the 5th year of ‘claim-made’ coverage, the average cost for most attorneys for ‘fully-rated’ policies are in the $1000 to $2500 range annually. The premium increase is due to step rating. Attorneys that practice in the higher risk areas expect to pay in the $3000 to $10,000 range annually. These costs vary by state and location.
Attorneys need to weigh the value of protecting ones assets versus the cost. For in the end Attorney Malpractice Insurance is Sleep Insurance.
To get a more definitive number as to the true cost of Legal Malpractice Insurance call us at 866.940.1101.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080