Lawyer Malpractice Insurance Career Coverage
Lawyer Malpractice Insurance Career Coverage provides an individual attorney with prior acts coverage for work done prior to their association with their current law firm. The reasons an attorney may want this coverage are:
- To cover past acts if their old firm did not continue professional liability insurance claims-made coverage and did not purchase an extended reporting period endorsement.
- The attorney is concerned that their past firm may not continue attorney malpractice coverage and likely will not buy a firm extended reporting period endorsement.
- The attorney was a solo practitioner and is joining a new firm. The attorney is discontinuing his/her old solo firm and does not wish to buy an extended reporting period endorsement.
- The attorney is leaving a large firm and is responsible for a “large” deductible for potential malpractice claims brought against said attorney at the old firm.
- The old firm’s insurer attorney malpractice policy only covers attorneys while they are working for the firm. While L Squared does not represent insurers that sell such a policy, there are malpractice insurers that do have these policies in place.
Not all malpractice insurers offer Career Coverage. This is usually done by endorsement of the current firm’s policy. Malpractice underwriters may choose not to provide this coverage given the attorney’s claims/disciplinary history and work history. It is important to request this coverage when starting with a new firm. It generally will not be added later.
Career Coverage is secondary coverage. It only pays covered losses if there is no other coverage to answer for the act. As such, most attorneys do not need this coverage when moving from one firm to another.
For the new attorney’s firm, adding this endorsement has consequences. If the attorney who has the career coverage endorsement has a malpractice claim, it impacts the current firm’s insurance coverage and insurance history. Adding career coverage to a policy opens the new firm up to past acts where the firm has no control or idea of what controls existed at the old firm. Covered career coverage claims may cause the new firm’s malpractice insurance carrier to be non-renewed and/or renewed coverage at a much higher premium.
It is also possible to obtain an individual career coverage policy, but these are expensive and individually underwritten.
Understanding the Cost of Malpractice Insurance for Lawyers
The cost of malpractice insurance for lawyers can vary based on numerous factors, including the area of law practiced, location, claims history, and the size of the law firm. Lawyers malpractice insurance rates typically range from $1,000 to $5,000 annually, depending on these factors. High-risk legal areas, such as medical malpractice or complex litigation, tend to have higher premiums. It’s important for lawyers to assess their practice’s risk profile to ensure adequate coverage without overpaying for unnecessary protections.
Factors Influencing Lawyers Malpractice Insurance Costs
Lawyers malpractice insurance costs are influenced by a range of factors, such as the size of the law firm, the types of legal services offered, and the lawyer’s experience level. Smaller firms and solo practitioners typically pay less for coverage, with premiums starting at around $500 to $1,000 per year. However, larger firms or those in high-risk areas of law may see their lawyers malpractice insurance rates increase, with premiums exceeding $5,000 annually. Just like other professional liability insurances, these rates are shaped by the lawyer’s history, practice areas, and geographic location.
Frequently Asked Questions About Attorney Malpractice Insurance Career Coverage
What is Career Coverage in Attorney Malpractice Insurance?
Career Coverage provides attorneys with prior acts coverage for legal work done before joining their current firm. This coverage ensures that an attorney is protected from malpractice claims related to past work if the previous firm did not maintain continuous claims-made coverage.
Why Would an Attorney Need Career Coverage?
An attorney may need Career Coverage to protect against potential malpractice claims related to past work if they are leaving a firm, or if they were a solo practitioner who is discontinuing their practice.
Can Career Coverage Be Added to My Current Law Firm’s Policy?
Yes, Career Coverage may be added as an endorsement to your current firm’s malpractice insurance policy. However, not all insurers offer this type of coverage, and it may not be available if the attorney has a problematic claims or disciplinary history.
How Does Career Coverage Affect My New Firm’s Malpractice Insurance?
Adding Career Coverage to your new firm’s malpractice insurance can have consequences. If a claim arises under this coverage, it could impact the new firm’s premium rates and even cause non-renewal of coverage. Firms may want to weigh the risks before agreeing to this coverage.
Is Career Coverage Expensive for Attorneys?
Another alternative to career coverage is a stand-alone run-off policy. Run-off policies tend to be expensive. When practical, the best option to protect past acts is to purchase an extended reporting period endorsement (ERP or “tail”) attached to the last in-force policy.
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
