Professional Liability-FAQ

Professional Liability-FAQ  

PROFESSIONAL LIABILITY FAQs

 

  • What exactly is meant by professional liability insurance?
    • Professional liability insurance covers a lawyer and/or entity (such as a professional corporation) for monetary damages resulting from claims made by clients (and in some circumstances other third parties) based upon the rendering of, or failure to render, professional services as an attorney.
    • Professional liability insurance is also often referred to as "errors & omissions" or "E&O" or "malpractice" insurance. These are just different ways of saying the same thing.

  • What types of policies are offered?
    • Standard Policy (Full time and Part time) on an Admitted basis
    • Corporate or Moonlighting policies
    • New Admittee and Arbitration/Mediation policies

     

    Based on your application, you may also qualify for the California Lawyers Economic Justice Program (EJP) available to solo practitioners.

     

    The EJP is designed for California solo attorneys practicing 2 years or more, currently uninsured and averaging less than $100,000 of revenue in 2 of the last 3 years. In order to be eligible an attorney must be claims-free. An attorney must also have no disciplinary actions, sanctions or grievances. Firms with more than one attorney are not eligible.

     

    Coverage is offered for attorneys in most Areas of Practice; however, some areas are not available and/or may require additional underwriting.

  • What is the approximate indication of premium?
    • Because many insurance companies require voluminous applications to be completed in order to offer a binding premium quotation, attorneys often seek a premium estimate before they commit the time necessary to complete the application.
    • But the Arch application form is so simple that there is no faster way to get a quote.
      Although completing the application does not guarantee that a quotation will be offered, once you get a quote from us, all you have to do is sign the acceptance and send us your down payment!

  • How do I get a quote?

  • How much coverage do I need?
    • This is a difficult decision for each lawyer and firm and is often based solely on cost. Please take into consideration the value of the matters handled by the firm. Please also remember that defense costs are part of, and reduce, the policy limits. This reduces the funds available to pay judgement or settlement. Insurance companies will normally allow you to adjust your limits, within parameters, each year. Under claims-made policies the limits of liability in force at the time a lawyer becomes aware of and reports a claim are the applicable limits for coverage. The average limits of liability purchased by small firms in California are $500,000 per claim / $1,000,000 aggregate.

  • How do I compare policies?
    • There is no such thing as a “standard” legal malpractice insurance policy. While all policies address the same basic coverage issues, there are differences in approach that can be very important in some circumstances. In all cases, you should read the policy (including any endorsements) carefully and be sure you understand it before you order coverage. As the program administrator, Mercer is here to assist you with your questions.

  • How do I compare insurance companies?
    Following are some key points of comparison:
    • Financial Security
      • Is the company admitted in California? Is the company rated by A.M. Best & Co., Standard & Poor’s and/or Moody’s?
    • Experience
      • How long and how successfully has the company written legal malpractice insurance?
    • Long–Term Commitment
      • Has the company demonstrated a commitment to this line of insurance through good and bad times?
    • Claims Handling
      • Does the company respond promptly, appoint qualified defense counsel when necessary, and actively pursue a fair and speedy resolution?
    • The State Bar Sponsored Program is underwritten through Arch Insurance Company. Arch is rated Excellent by A.M. Best Co. Features of the Arch plan include:
      • claims expense coverage of $50,000 in addition to the limit of liability
      • prior acts coverage available to qualifying firms
      • reduced deductible for claims resolved through Alternative Dispute Resolution (ADR)
      • free 60-day Extended Reporting Period coverage
      • up to $5,000 coverage for defense of disciplinary proceedings
      • up to $10,000 reimbursement for loss of earnings

  • Do I have to carry professional liability insurance?
    • If you practice as a shareholder of a professional law corporation, a partner in a firm organized as a Limited Liability Partnership ("LLP"), or as a Registered Foreign Legal Consultant, statutes and The State Bar rules require you to carry malpractice insurance or establish other financial responsibility arrangements. In addition to statutory and State Bar requirements, some clients may require you to carry and furnish proof of coverage as a condition of your engagement.
    • Current statistics show that in any given year, a minimum of five to six insured lawyers out of every 100 in private practice will experience a malpractice claim. Statistically, this means a firm of 20 lawyers could be the recipient of a claim every year.
    • Since the exposure to legal malpractice is greater now than ever before, it is a prudent part of law office management to establish meaningful loss prevention practices, including the purchase of proper lawyers professional liability insurance coverage.
    • According to surveys conducted on behalf of The State Bar, over 90 percent of California attorneys in private practice are covered by malpractice insurance.
    • Mandatory Disclosure Rule - Rules of Professional Conduct: Rule 3-410 Disclosure of Professional Liability Insurance requires a lawyer to disclose to a client in writing if they do not have professional liability insurance if they anticipate working more than 4 hours for the client.

  • Can I pay the premiums in installments?
    • The Lawyer's Proliability Program offers an optional, convenient premium financing plan. The plan requires an affordable down payment at the inception of coverage, with the balance payable in nine equal monthly installments of principal and interest beginning 30 days thereafter. Full details are provided at the time of quotation.

  • Who is eligible for Professional Liability coverage?
    • All licensed attorneys practicing in the state of California are eligible to apply. Designed for Law Firms (Up to 40 Attorneys)

  • What are the Product Specifications?
    • Limits of Liability
      • Per Claim: $100,000 to $5 million
      • Aggregate: $300,000 to $5 million
      • Deductible: $0 to $50,000

  • What are the Claims Expenses?
    • Additional Claims Expense Limits Available: 1/2 of the per claim policy limit to $1,000,000
    • Claims Expense Coverage Included at No Charge: $50,000

  • What other Coverages and Benefits are available to me?
    • Loss of Earnings Reimbursement: $500 per day, up to $10,000
    • Prior Acts Coverage: Available
    • Appearance Investigation or Defense Coverage: $5,000
    • Extended Reporting Period Coverage (tail): Automatic 60 Day Extended Reporting Period Option
    • Optional Extended Reporting Coverages (tail): 12, 24, 36 month or unlimited
    • Data Incident Response Expense: $25,000

     

    This disclosure is an outline of coverage and a summary of the policy. The policy should be consulted to determine terms, conditions, exclusions and limitations.

 

Professional Liability Insurance