We have actually helped law firms that were carrying 2 or 3 legal malpractice insurance policies because the malpractice insurers they had written with were only licensed in one state. In many cases the premiums were cut in half once the firm was written on one policy. Attorney malpractice insurance insurers that are not licensed to write in all states where the law firm has clients will many times decline to write coverage or limit coverage to just one state.
Many mutual insurers have this issue. But there are times that an insurer may be licensed, but still refuse to write in a particular state. For some insurers even one client in the wrong state cause a declination.
The reasons for this are:
1. Attorney malpractice insurers generally do not have panel counsel in states not licensed in.
2. A lawyers professional liability insurer may have written business in that state but has since withdrawn, because of poor results. This can be due to the legal climate in that state and/or poor underwriting results. Either way insurer wants nothing to do with handling claims in a particular state.
3. A malpractice insurer is concerned that the law firm may not understand the law in another state which could result in additional attorney malpractice exposures.
4. A malpractice insurer is comfortable with very small percentage of a law firm’s work coming from another state, but may ask additional questions as to the type of work performed and percentage of this work in another state.
For certain law firms that run into this problem, best solution is to align with a malpractice insurance insurer that is licensed in all states that the law firm does business in. This may or may not be the least expensive policy premium option, but likely is the best insurance coverage solution. Fortunately, L Squared Insurance Agency being a national agency represents many competitively priced insurers that write nationwide.