Attorneys, Independent Lawyers and Law Firms work in many different types of law. Some attorneys specialize in providing legal counsel to financial services companies. Other Lawyers specialize in disability cases. Still other law firms specialize in general practice. Each different type of law brings with it, the possibility to be liable for damages. With each unique type of risk there are specific insurance coverages that a business in the law profession may need. Here are 6 Coverages every all law firms should strongly consider.
Recommended Insurance Programs for Attorneys and Law Firms
Minimum recommended coverage:
- General Liability
- Professional Liability (Malpractice Insurance)
- Property Insurance
- Hired and Non-Owned Auto
- Business Income with Extra Expense
- Workers Compensation
Other coverages to consider for Law Firms:
Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, Employee Benefits Liability, Umbrella Liability, Auto Liability, Building, Computer Fraud, Forgery, Employment Practices Liability (EPLI), Business Auto Liability and Physical Damage.
General Liability Insurance is needed by all businesses. It is required by law in nearly all states for most businesses. This coverage will protect your business from the risks you face when the open public comes in to your facility. The risk of slips, trips, and falls is low because of the lack of a large volume of customer coming and going from the facility.
Professional Liability risks are much higher in the Law Profession. Most Attorneys refer to this type of coverage as Malpractice Insurance. This type of coverage protects professionals who provide professional advice and services. This is at the heart of what lawyers do. If law firms offer advice to a client and the outcome is not desirable, the client has the ability to sue the lawyer for that advice. Even if the claims are unfounded, it can take an enormous amount of time, energy, and money for lawyers to defend themselves. This coverage can reimburse law firms for these costs up to the limits of the policy.
Commercial Property Insurance is necessary if the law firm owns the property you operate your office. It is important to consult with your insurance agent about what exactly is and is not covered under your policy. The coverage will likely cover the building, structure and foundation; but if you have specialized equipment you may need additional coverage. If you live in an area where natural disasters are common (Floods, Hurricanes, Tornadoes, Etc.) you more than likely need this coverage or the damage resulting may not be covered.
Hired and Non-Owned Auto
If your business owns vehicles and you or your employees use those vehicles for business purposes than you need commercial auto coverage. More than likely, you do not own a business vehicle. Still you and your employees may periodically use your personal cars for business purposes. This is when a Hired and Non-Owned Auto Policy is necessary. Because the employee is in the car on business purposes than the liability to third parties is the liability of the business, not the individual. If your employee causes a wreck, the damages occurred as a result of that wreck are the liability of the business. This coverage will help in just these types of situations.
Business Income with Extra Expense
Business Income with Extra Expense Coverage will cover a law firm for loss of income suffered by a business when damage to its premises (by a covered cause of loss) causes a slowdown or suspension of its operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property. The key part of this coverage is the covered loss portion of the policy. If your business is damaged because of a flood or an earthquake and you do not have this coverage, the business income and extra expense policy will not kick in. If the damage is because of a fire and it is covered by your commercial property policy, than the additional policy will kick in. For this reason it is wise to work with one insurance agent and make sure they are dealing with one or a few carrier to provide you optimal coverage. This will prevent gaps in coverage and speed up the time to process your claim.
Workers Compensation Coverage is required by law in most states for most attorneys. There are some exceptions in some states, so it might be worth your time to check with the proper governing agency in the state your law firm operates. Even if your business is eligible for an exemption it is more than likely beneficial for your law firm to still secure coverage. One expensive injury to an employee can result in a large cost to a business. In many scenarios the losses cause a business to close for good.
The risks associated with workers compensation are fairly low in this industry. Long term Repetition injuries like carpal tunnel may occur from employees sitting at a desk for long periods of time. Having adequate safety programs and offering desks that allow employees to stand may be beneficial to your business. This additional desk may be expensive, but an injured employee who is out of work for three months because of surgery can be significantly more expensive. Partnering with an experienced independent insurance agent can help you determine if you need this coverage.
Attorney Liability Insurance Classification Codes
Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for Lawyers. Here are the most common business insurance classifications for Attorneys:
Business Liability Category: Service Business
SIC Business Insurance Codes:
- 8111: Legal Services
- 9222: Legal Counsel and Prosecution
NAICS Liability Classifications:
- 541110: Law Office or Legal Firm
- 922130: Legal Counsel and Prosecution
- 541120: Notary Office
- 541199: All Other Legal Services
Business ISO General Liability:
- 66122: Lawyers Offices
Common Workers Compensation Class Codes:
- 8820: Attorneys—All Employees