“My Friend does the same thing I do but is paying half what I pay for Lawyers Professional Liability Insurance LPL).”
Both attorneys may have the same insurer and we may write both accounts. But premiums can differ as their law practices on an insurance application may be vastly different.
The factors that impact LPL costs are:
1. Practice area differences impact LPL premium rates, sometimes by 2 or 3 times the premium. This is especially true if one firm has high-risk practice areas such as Medical Malpractice or Real Estate and the other attorney does not. Even if they ‘do’ the same thing, if the areas of practice percentages are different the premiums can be quite different.
2. The prior acts dates may differ. If one attorney one has had coverage for one or 2 years and the other attorney has “full prior acts”, the LPL costs can differ by over 50%.
3. The liability limits for the LPL policies may be different. One attorney’s malpractice policy has claims expenses outside the limits (CEOL) and the other does not.
4. The deductibles may be different, or one has 1st dollar defense and/or an aggregate deductible and the other does not
5. The hours worked for the 2 attorneys can differ.
6. One attorney has great internal controls the other attorney’s procedures are lacking.
7. One attorney sues clients to collect unpaid legal fees; the other attorney has never sued a client.
8. One attorney has had claims and the other attorney has never had a claim or disciplinary matter.
9. The attorneys are with different malpractice insurers. Premiums from one insurer to another can differ by over 50%.
10. And finally, two attorneys interpret the same application question differently.
Each factor can have a dramatic impact on premium. When you combine two or more of these factors LPL premiums can easily differ by two or more times.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080