Why is insurance a must for attorneys?
Beyond malpractice insurance, attorneys rely on several different policies to protect themselves against unexpected medical bills and lawsuits from accidents. Business insurance can help you comply with state laws, sign leases and contracts, and recover from fires, data breaches, and theft.
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6 insurance policies every lawyer should consider
These insurance products defend against the most common risks and liabilities faced by lawyers. TechInsurance does not offer professional liability insurance for lawyers, also called malpractice insurance, though it is recommended.
Business owner's policy
A business owner's policy, or BOP, combines general liability coverage and commercial property insurance at a discount. Low-risk small business owners are often eligible for this bundle.
- Personal injury lawsuits
- Business property damage
- Business interruption coverage
General liability insurance
A general liability insurance policy defends against third-party injury and property lawsuits, such as a client who suffers an injury at your law office. It's often required for a commercial lease.
- Client bodily injuries
- Accidental damage to a client's property
- Slander and other advertising injuries
Workers' comp insurance
Workers' compensation insurance protects law firms and sole proprietors from work-related medical bills that health insurance won't cover. Most states require this coverage for employees.
- Medical expenses from workplace accidents
- Disability benefits for injured workers
- Legal costs from employee injuries
Commercial auto insurance
Almost every state requires commercial auto insurance for vehicles owned by a business. It covers financial losses in the event of an accident involving your law firm's vehicle.
- Auto accident legal fees
- Vandalism or other vehicle damage
- Vehicle theft
Cyber insurance
Cyber insurance helps attorneys recover financially from data breaches and cyberattacks, such as a ransomware attack. It's also called cyber liability insurance or cybersecurity insurance.
- Data breach investigations
- Client notification costs
- Fraud monitoring services
Fidelity bonds
A fidelity bond is a type of surety bond that reimburses your clients in the event of employee theft. Some clients, particularly those in financial services, may require a bond before they'll work with your law firm.
- Employee fraud
- Identity theft
- Employee embezzlement
Lawyer insurance costs
From our customer data, here's a quick look at average law firm insurance costs:
General liability: $29 per month
Business owner's policy: $57 per month
Workers' compensation: $52 per month
Factors that insurance carriers consider when underwriting your premiums include:
- Area of practice, such as family law or estate planning
- Number of employees
- Value of your business property
- Years of experience
- Policy deductibles and exclusions
- Claims history
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Why attorneys choose TechInsurance
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Common questions about lawyer insurance
Do attorneys and other legal professionals need to carry insurance?
Yes, you might be required to carry business insurance in several situations, often dependent on the laws in your state. Here are a few reasons why businesses that offer legal advice might need insurance:
- Some localities require legal malpractice insurance. Your state, county, or city might require attorneys and law firms to carry lawyers' professional liability insurance (LPL), also called malpractice insurance or errors and omissions insurance (E&O). For example, all attorneys in private practices in Oregon must carry this coverage, but it's optional in New York. Even if it's not required, you might need to disclose whether or not your law firm has this coverage.
- You may need workers' compensation for your employees. Most states require law firms with employees to carry workers' compensation insurance.
- Business-owned vehicles must be covered by commercial auto insurance. Almost every state requires commercial auto insurance for vehicles owned by a business, and each state has its own requirements for how much auto liability insurance you need for any vehicle.
- Your clients may require you to carry insurance or a bond. Even if you're an independent contractor, your clients might ask you to carry insurance to make sure they're not affected by a malpractice claim. They also might request a fidelity bond if they entrust you with financial assets.
- It's a crucial part of risk management. Accidental injuries and malpractice lawsuits can happen at any law firm, or to any solo attorney. Business insurance covers costly attorney’s fees and other expenses that could otherwise shutter your firm.
What other types of insurance coverage do lawyers need?
In addition to the policies mentioned above, businesses that offer legal services often invest in the following types of coverage:
- Business interruption insurance: Often included with commercial property insurance or a business owner's policy, this policy covers day-to-day expenses during a forced closure from a fire or other covered property claim. It's also called business income insurance.
- Hired and non-owned auto insurance (HNOA): If you drive to meet clients, you need protection beyond that offered by your personal auto policy. HNOA covers vehicles used but not owned by your business, including your own car when you drive it for work.
- Employment practices liability insurance (EPLI): This policy covers employment-related issues, such as wrongful termination, discrimination, and other violations of employee rights.
- Directors and officers insurance (D&O): Officers and board members may request that you carry D&O insurance, which protects them financially in the event of a lawsuit related to a decision they made on behalf of your business.
- Commercial crime insurance: You can buy a fidelity bond to protect your clients from dishonest employees, or add commercial crime insurance to your property insurance to safeguard your own business against employee theft and fraud.
- Commercial umbrella insurance: An umbrella policy boosts the coverage of your general liability, commercial auto, or employer's liability insurance when the policy reaches its limit on a claim.
Though it's not an insurance policy, another protection to consider is a hold harmless agreement. Also called an indemnity agreement, it's an agreement between you and your clients that they will not sue your business in certain situations.
