In 10 minutes or less, you can learn just about everything you need to know about malpractice insurance for lawyers. The most important thing to remember is mistakes happen, and law firms face lawsuits every day that could put them out of business.
What Is Malpractice Insurance for Lawyers?
Also called professional liability insurance, malpractice insurance for lawyers protects law firms and their partners, associates and employees if they make a mistake while providing legal services. Claims can arise from administrative errors (lost paperwork), breach of confidentiality, professional misconduct, missed deadlines and negligence (inaccurate advice).
#1 Is Malpractice Insurance Deductible?
Yes. Malpractice insurance is considered a cost of doing business just like licensing, wages, rent and office supplies. Solo practitioners and law firms can deduct the expense of malpractice insurance from their corporate taxes, according to the IRS.
#2 What Does Malpractice Insurance Cover?
Attorney malpractice insurance pays for settlement, defense and court costs if your firm is sued by a client who claims someone in your practice was negligent. Remember, even when you did nothing wrong, you will still incur out-of-pocket expenses for your defense.
#3 How Much Is Attorney Malpractice Insurance?
General practitioners typically pay $2,500 annually; whereas, attorneys who specialize in higher risk areas of law, such as trusts and estates, patents and trademarks, may pay up to $10,000 a year. Factors affecting price include business size, years in business, location and claims history.
#4 How Much Is Attorney Malpractice Insurance for a Solo Practitioner?
The average attorney malpractice insurance premium for a solo practitioner is about $2,800. Factors that determine how much your annual premium is include location, years in business, claims history, type of law you practice and number of clients. Because you most likely have few, if any, employees, your rate will be lower than a firm with several partners.
#5 Where to Get Malpractice Insurance?
Because malpractice insurance for lawyers protects your firm and your personal assets and future earnings, it’s important to work with an insurance provider, like JAISIN, who specializes in professional liability insurance plans. Purchasing a policy from the same agent who sells you general liability coverage could leave you seriously unprotected.
#6 Who Pays for Malpractice Insurance?
Lawyers, accountants, architects, engineers and real estate professionals have complex risk management needs and typically don’t have an internal risk management department. They face the risk of getting sued every day just by giving advice and providing services. Malpractice insurance is designed for them.
#7 Do I Need Malpractice Insurance?
If you answer yes to any of these three questions, you need malpractice insurance.
- Do you advise clients on a regular basis?
- Do you have to sign contracts that require you to carry coverage?
- Do you provide legal services directly to clients?
When weighed against the potential cost of being uninsured, malpractice insurance is a smart investment.
#8 Do You Need Malpractice Insurance in Florida?
The state of Florida does not require lawyers to carry attorney malpractice insurance.
However, lawyers who practice in Florida must be a member of the Florida Bar and must report whether they carry coverage or not.
One mistake can disrupt your business and cause considerable financial harm. Malpractice insurance for lawyers protects you and your firm by helping cover legal fees, defense costs, settlements and judgments, if a client sues for service-related negligent acts, errors or omissions.
Smaller firms may settle for a policy with a $1 million limit (maximum limits can go as high as $10 million), because they either can’t afford more or think they really don’t need it. Do not choose your coverage based solely on price. Work with an insurance advisor, like the ones at JAISIN, who specialize in malpractice insurance for lawyers. Their first priority is to make sure your coverage matches your needs.
It’s a fact of life: When people think they’ve been wronged, they can and most likely will sue you. One of the benefits of having your attorney malpractice insurance with JAISIN is that we can advise you on how to manage your risks to help you remain claim-free.