Lawyers Mutual Insurance of California (LMIC)
Choosing the Right Attorney Malpractice Insurance Deductible for You
Selecting the right deductible option is a strategic decision that balances risk and financial planning. It’s not just about current needs but also about anticipating future scenarios. The deductible amount sometimes called a retention amount makes up part of the exposure for the firm.
Factors to Consider When Choosing a Deductible Option:
- Financial Stability: Assess your firm’s ability to handle out-of-pocket expenses associated with higher deductibles.
- Claims History: A firm with few or no past claims might opt for higher deductibles to reduce premiums.
- Risk Tolerance: Consider how much financial risk you’re willing to assume versus paying higher premiums.
- Practice Area: Certain legal specializations carry higher risk, influencing deductible choices.
- Firm Size: Larger firms may face more claims, making aggregate deductibles more appealing.
LMIC’s standard policy has following deductible options included:
- Per Claim Deductible—the firm is responsible for the deductible on each LPL claim. The policy premium is usually less than any other option. Certain practice areas or firm practices may tend to develop multiple claims in a policy year. A per claim deductible can increase the financial risk to the firm.
Attorney Malpractice Deductible Options by Insurer
The Lawyer Professional Liability (LPL) different deductible options may be part of the policy or provided as an additional charge. Depending on circumstances a firm may chose more than one deductible option. The deductible options can be in the declarations page or via policy endorsement. LMIC’s policy language that deals with deductibles is as follows:
ARTICLE 1.
The Definitions
1.7 “Deductible” Means:
the amount specified in the Declarations, which must be paid by the Insured with respect to each Claim toward Claim Expenses and/or Damages before the Company has any obligation to pay any sums.
ARTICLE 2.
The Coverage
2.3 Supplemental Coverages
The Company will make the following supplemental payments:
(a) Disciplinary Proceedings: The Company will reimburse the Insured for reasonable costs and attorneys’ fees incurred by the Insured, through counsel selected by the Insured, in connection with any Disciplinary Proceeding brought against the Insured during the Policy Period and reported to the Company during the Policy Period. The Company’s liability in connection with all such Disciplinary Proceedings is limited to $50,000 per Policy Period. The Claim Expense Allowance shall not apply and no Deductible will be due with respect to such a Disciplinary Proceeding.
(b) Attendance at Trial or Arbitration: The Company will reimburse the Insured for actual loss of earnings and reasonable expenses, up to $500 per day and $5,000 per Claim, incurred by the Insured at the Company’s written request in connection with attendance at trial or arbitration of any Claim. However, no such payment will be made with respect to any Claim for which the Insured refused to consent to a settlement acceptable to the Company and Claimant, or for any Claim with respect to which any Insured is in breach of any of its obligations under the policy, including but not limited to payment of the Deductible. Any reimbursement under this Section will be subject to Section 4.3.
(c) Subpoena Assistance: The Company may, at its sole discretion, retain an attorney to provide advice relating to a subpoena received by the Insured regarding production of documents, to prepare the Insured for sworn testimony, and to represent the Insured at deposition of the Insured, provided that the subpoena arises out of a lawsuit to which the Insured is not a party and relates to a matter in which the Insured performed Professional Services. Any notice the Insured provides the Company of such subpoena shall be deemed notice of a potential Claim pursuant to Section 5.2. The Claim Expense Allowance shall apply and the Deductible will be due with respect to such subpoena assistance.
(d) Pre-Claim Assistance: Prior to the date a Claim is made, the Company may, at its sole discretion, appoint counsel to investigate a potential Claim the Insured reports in accordance with Section 5.2. The Claim Expense Allowance shall apply and the Deductible will be due with respect to such pre-claim assistance.
ARTICLE 4.
Limits of Liability
4.5 Deductible
The Deductible stated in the Declarations shall be applicable to Damages and Claim Expenses with respect to each Claim.
This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
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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
