Insurance For Law Offices and Attorneys

Important Reasons Why Law Firms Need Insurance

An Overview of the Types of Insurance for Law Offices and Attorneys

Business Owner’s Policy (BOP) or General Liability Insurance and Property 

This is a primary coverage that provides protection against most forms of lawsuits. General liability insurance covers injuries that have the potential to occur on the premises. However, this insurance policy is minimal for law firms because the communication with clients is handled through telephone or email, and all of the business is conducted in the office. 

Property insurance also covers personal property, including laptop or computer and furniture. The aim of the policy is to provide protection in the event of a flood, fire, or any other unexpected situation that can affect the ability to work or the condition of the property. General liability and property policies are often known as Business Owners Policy. 

Commercial Umbrella Insurance

Sometimes a BOP may not be sufficient to cover up a particular claim. This is where commercial umbrella insurance can help. This type of insurance is specifically designed to protect law offices and attorneys from huge lawsuits and allegations that go beyond the coverage limits of the underlying policy. Commercial umbrella insurance is the best thing to have for many law firms. 

After all, working in a service sector requires you to deal with many people on a regular basis; hence, the chances of risk are increased, making extra liability coverage a no-brainer. An example of umbrella insurance coverage is a severe accident that hinders your ability to work for a substantial period of time. 

Professional Liability Insurance 

Professional liability insurance is also known as legal malpractice insurance or errors and omissions insurance. It is ideally the first insurance policy that a law office or an attorney should purchase. Since it is the most likely area of claim, it is easily the most important insurance policy for law firms. 

Unfortunately, even the best attorneys at work can become a victim of a lawsuit for legal malpractice. There are various scenarios regarding this, such as bad advice, conflict of interest, missed deadline, misinterpretation of the law, or merely because of some disgruntled client looking for a target to sue. Nevertheless, given how easily a lawsuit for malpractice can be filed, many lawyers do not have this line of insurance. 

Professional liability insurance covers trial-related expenses, such as expert witnesses, e-discovery, etc. and the cost of legal defense. It also covers the cost of settlements or damages incurred against the firm. Usually, the policies rarely provide coverage for any penalties or fines, but a better policy will provide a strong defense against any alleged penalties and fines.

Cyber Liability Insurance

Law firms are constantly being targeted by professional hackers, which is not surprising since the firm carries a lot of sensitive information and data. According to a report in the US, in 2017, at least 22% of law firms were targeted by cyber attackers or data breakers. 

Hackers are especially interested in the type of sensitive and crucial information that is at the disposal of law firms so that they can easily sell it to the opposing party, to the media, or to literally anyone who could use the vital information to their benefit in exchange for a hefty sum of money. 

In recent times, many law firms have become targets of phishing scams and cybercrimes that involve a criminal trying to lure the law firm into sending money in a fraudulent account or hacking into the email of an attorney and asking clients to send funds to an illegitimate place. This type of crime is also known as social engineering, and it is essential for law firms to have coverage against them.

Employment Practices Liability Insurance (EPLI)

The need for this form of coverage subsequently grows as the size of the firm gets bigger. If you are working alone as an attorney, you will, of course, not need this protection. However, as the firm continues to add more attorneys, the issues and cases become more complex. Any law firm that has significant employees should get EPLI. This type of coverage will protect the law office from employee-related claims, including harassment, wrongful termination, failure to promote, or discrimination. If it is a large organization with a high turnover rate, then EPLI is absolutely mandatory without any considerations. 

Directors and Officers (D&O) Insurance 

As is the case with many other business organizations, D&O insurance for law offices provides protection to the firm against the lawsuits filed for mismanagement of the office, leading to financial crises. The officers and directors of the law firm are subjected to unique risk as the attorneys present in the office can easily file a lawsuit against the directors and the officers. 

However, a normal D&O policy may not be sufficient to cover the damages caused by the suit; thus, a new policy should be tailored accordingly for the law firm. Additional risk exposures include an over-extending on partner lateral hires, a botched acquisition, or tortious interference with a case. 

Workers Compensation Insurance

There is not much to consider while thinking about getting workers compensation insurance since it is mostly required in every state. Fortunately, this type of insurance will not cost too much since a law firm is not considered a high-risk workplace area. However, the chances of having accidents can never be eliminated, and worker’s compensation will provide coverage to the law office if the employees ever sustain any injuries at work. This could be at the office or the courthouse or any place where an employee is representing the office in a professional capacity.