How Much Does Lawyer Malpractice Insurance Cost?

How Much Does Lawyer Malpractice Insurance Cost?

How Much Does Lawyer Malpractice Insurance Cost? Being a lawyer is a difficult job that requires a lot of knowledge about the court system. Even the most experienced and well-equipped lawyers make mistakes. Also, clients who are unhappy with how their case turned out may blame their lawyers. Legal malpractice insurance is very important for dealing with these possible claims.

In this guide, we’ll tell you what you need to know about what is lawyer malpractice insurance? How Much Does Lawyer Malpractice Insurance Cost, and how to find out if an attorney has malpractice insurance so you can choose the best policy for yourself.

What Is Lawyer Malpractice Insurance?

Lawyer Malpractice Insurance is a type of insurance coverage that protects your law firm from a claim that could put a financial strain on your business.

It ensures that your business is financially protected from mistakes or misunderstandings that could lead to claims that cost a lot of money.

What Does Lawyer Malpractice Insurance Cover?

When considering Lawyer Malpractice Insurance, it’s important to know exactly what the policy covers.

A common way to describe the coverage is that it covers any professional legal services that the named insured does for a fee. This means that any individual lawyer who works on behalf of the named insured is covered, and the law firm’s assets are protected. So, it is very important to review your policy to ensure that all of your firm’s needs are covered.

The best possible representation is always the goal when a client is being represented. Even so, mistakes can still happen, no matter how hard a company tries, because, let’s face it, we’re all human and make mistakes.

Lawyer malpractice insurance gives your business the protection it needs to pay for damages and legal fees if a claim is made against it. This gives you peace of mind and keeps your business in good financial shape.

Legal malpractice insurance is slightly different from other kinds of insurance because it is called a “claims-made policy.” This means that the policy covers the event when a claim is made against an insured, not when it happened. With a claims-made policy, your current policy will cover the claim even if the event in question happened many years ago as long as you have kept your coverage going.

What does Legal malpractice insurance cover?

The details of your malpractice insurance coverage will depend on your provider and the policy you choose, but many plans protect your firm and individual attorneys against the following claims:

  • Professional negligence
  • Claims that go back
  • Physical harm
  • Damage to the property of a third party
  • Loss or damage to business property
  • Injury to the person
  • Lost money from a business
  • Coverage for equipment failure
  • Leak of data
  • Damage from third-party advertising
  • Network trouble
  • Loss of paper documents or devices

Even though legal malpractice insurance can protect you in many situations, it won’t cover the following:

  • Acts that are fraudulent, illegal, dishonest, or mean
  • Services are given to businesses that the insured firm or attorney owns or runs
  • ERISA outlines the duties of trustees for retirement plans.
  • Claims or lawsuits between two lawyers at the same insured firm
  • There are unrevealed old cases that could lead to claims.
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How Much Does Lawyer Malpractice Insurance Cost?

How much does lawyer malpractice insurance cost? Not every insurance is the same. Learn the most important things that affect your costs. Many things affect how much an average policy for attorney costs, so please keep in mind that these numbers can vary a lot from one part of the country to another and from one type of attorney to another. The average cost per lawyer can be as low as $500 for a lawyer with no prior acts and as high as $6,500 for a lawyer who works in a riskier area of law or has wanted coverage for many years in the past. In general, lawyers can expect to pay between $2500 and $3500 for a full policy with generally accepted limits.

Every year, 4-5% of practicing lawyers in the U.S. face a claim of legal malpractice, so you need to know what drives the cost of malpractice insurance for lawyers. Many lawyers only look at the price of their policy and don’t think about the things that affect how much it costs to buy a policy.

So, what makes your policy cost more or less? “It depends” is the short answer, but we know that’s not helpful. Due to many factors, the annual cost of malpractice insurance for a law firm can vary greatly from one firm to the next. The main things that affect the cost of legal malpractice insurance are the type of law a firm does, its location, size, number of years in business, number of claims in the past, the amount of coverage the firm wants, and risk management discounts.

What kind of work your firm does

Your firm’s areas of practice and the number of cases in each area are the main factors determining your annual premium for malpractice insurance.

Some areas of law, like intellectual property, class actions, securities, real estate, corporate tax, entertainment, and civil litigation-plaintiff, have more frequent and more serious claims than average. This means that their annual premiums are usually higher than those in other areas of law.

“Defense firms usually have the lowest rates,” Ryan Fox, an underwriter at Aon Attorneys Advantage, said. “In general, these kinds of businesses are among the least likely to be sued.”

Even though defense lawyers may not get sued as often for malpractice, they should still get insurance because there are other risks. Fox said, “Instead, we get a lot of complaints about discipline.” “If your client is in jail and wants to get back at you, all they have to do is file a complaint with your state licensing board. It won’t cost them anything.”

Where your business is

Your policy’s annual premium is affected by the state where your business is based and, in some cases, by where in the state your business is. One thing that varies from state to state is how much your firm charges per hour for its services. In general, city law firms charge more per hour than rural ones. When rates are higher, claims tend to be higher for the company.

“As a result, a lawyer in Los Angeles will pay more than a lawyer in a small town in Iowa,” Fox said. “Some states have more than one territory for selling insurance. In Florida, our main program has three underwriting territories, and lawyers in the Miami/Dade County area pay more than lawyers in other parts of the state. Some insurance companies may limit their exposure in certain states based on how well their books are doing (how many claims they have paid out in that state). They may also be unable to write in some states because of filing rules. It must be filed in every state where an admitted insurance program is available.

How Big Your Firm Is

In other professions, annual malpractice premiums are based on how much money a company makes, but law firms are rated based on how many lawyers work there.

“This is how it is because lawyers charge by the hour,” Fox said. “It’s easier for an insurance company, including those that work with the Aon Attorneys Advantage program, to figure out how much risk they’re taking by looking at how many lawyers are in the firm and how many cases each one is working on.”

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Claims Your Firm Has Made Before

Not only can past and current claims affect the price of your firm’s policy, but they can also affect whether or not you are eligible.

Firms that have filed claims in the last five years can’t get an admitted policy. Instead, they would have to get coverage from a non-admitted carrier, which usually charges a higher premium for the same coverage. The Aon Attorneys Advantage program works with both admitted and non-admitted carriers to ensure that our clients’ different risk profiles can be covered in various ways. 

How much coverage do you want for your business?

The level of coverage your business wants is also a factor in the rating. Smaller companies usually buy limits of $1 million, but our admitted program can write limits of up to $5 million. The limits on deductibles range from $0 to $15,000. Higher deductibles mean lower annual premiums.

Fox said, “Our admitted policy pays for more claim defense costs outside of the policy limits.” “Your coverage limit determines how much of your extra defense costs are covered by the policy.” For example, a $1 million policy covers up to $250,000 in extra legal costs, and a $5 million policy covers up to $500,000 in extra legal costs. This feature does not cost anything extra. This coverage is good because it leaves more money for possible settlements. On the other hand, if a policy pays for defense costs up to the policy’s limits, it reduces the amount of money you can be sued for.

Risk Management Discounts

Your insurance rates for legal malpractice can be lowered in several ways. You may get a discount if your business has yet to have any insurance claims in the last five years. You may also get a discount if you can show that your firm uses risk management practices, such as engagement/disengagement/nonengagement letters, docket control, and waivers, to avoid conflicts of interest. You might also get a discount if you take courses to keep your legal knowledge up to date.

“The amount of these credits depends on the size of the business and the state in which it is located,” Fox said. Firms in our admitted program are encouraged to use the three free CLE credits they get each year to lower their rates.

Step rating

Most malpractice insurance policies for lawyers are based on claims made.

“A step rating is a feature of a claims-made policy,” Fox said. “A new lawyer who is just starting out usually doesn’t have many clients, so their risk is lower than that of a firm that has been around longer. So, an insurance company gives a lower rate for the first few years of a policy like this.”

In most states, we have a six-step process for letting people in. The step increase can be anywhere from 30% to 50% in the first year of your policy. The percentage of the step increase goes down every year until the policy is seven years old and you pay the mature rate.

“This is one of the parts of a claims-made policy that people don’t understand very well,” Fox said. “It makes some lawyers think their rates will go up yearly for the next six years. As you get more customers, your risk increases, you have a step increase, and your rate goes up.

The Cost of Going Bare

Going without insurance is called “going bare” in the insurance world. Even though malpractice insurance is not required in every state, having it can be a good way to protect yourself. It also says something about how well-run your business is.

Even though you may have never been sued before, it is possible. All it takes is one client who doesn’t like what you’ve done. Even if you didn’t do anything wrong, you could still be sued and have to defend yourself. As a lawyer, you know better than anyone how much time and money a lawsuit can cost.

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Benefits And Risks Of Lawyer Malpractice Insurance

  • Protection from being sued: Whether you are a civil or criminal lawyer, the outcome of a case is very important. If your mistake makes things worse, your client could sue you. Legal malpractice insurance helps pay for a lawyer’s defense in a lawsuit and any damages that result.
  • Don’t worry: When an attorney knows that their firm has full malpractice insurance, they can focus on their work and give their client the best case they can.
  • Compliance: Many states require lawyers to have at least a certain amount of insurance. Also, some states require firms to let potential clients know if they need insurance.

The possible cost of not having health insurance

Legal malpractice claims can happen to any lawyer, no matter how careful and professional they are. These lawsuits can hurt your business’s reputation and make you lose clients.

On top of the cost of legal defense and damages, fighting a lawsuit can take your attention away from work that brings in money. With malpractice insurance, you can focus on the clients you already have who need and want your services.

How To Find Out If An Attorney Has Malpractice Insurance?

You can find out if an attorney has malpractice insurance in a few different ways:

  1. Ask the lawyer immediately: Most lawyers will tell you openly and honestly if they have malpractice insurance so that you can ask them.
  2. Check the lawyer’s website: You can check an attorney’s website to see if they have malpractice insurance because of many lists of information about their insurance coverage there.
  3. Talk to the bar association in your state: The state bar association in your state may have information on file about an attorney’s insurance coverage. You can call them to determine if an attorney has insurance against mistakes.
  4. Talk to the lawyer’s insurance company: If you know the name of the insurance company, you can try calling them to find out if the lawyer has a policy still in effect.

Remember that just because an attorney has malpractice insurance doesn’t mean they are good at their job or have good morals. It just means they’ve done something to protect themselves from lawsuits.

Advice on How to Buy lawyer malpractice insurance

Before choosing how much does lawyer malpractice insurance cost, keep the following in mind:

  • Identify your risks: Carefully look at your firm, considering its size and the types of law it practices, to find any possible risks. After that, pick the right limits and add all the coverages that apply.
  • Work with an independent agent: An independent insurance agent can help you find providers with the best rates and the most experience with legal malpractice insurance that fits the needs of your practice.
  • Compare quotes: Prices for policies vary between insurers. Think about a few different quotes to find the best rates and coverage.


Do I need insurance for workers’ comp?

Even though the risk of getting hurt in the legal field seems low, accidents do happen. Also, if you work with at least two people, most states require you to have workers’ compensation insurance.

What kind of insurance do I need if I let my employees drive their cars to court?

Personal auto insurance doesn’t pay for damage caused by things you do at work. To protect your employees in case of an accident, you need commercial auto insurance.

Do I need insurance against being sued?

In addition to giving you the money you need to defend yourself in court and pay for any possible damages, malpractice insurance will protect your professional reputation from the bad press that comes from lawsuits like these.

Conclusion – How Much Does Lawyer Malpractice Insurance Cost?

Even when people do their best, malpractice lawsuits are almost always a risk to the job. Legal malpractice insurance protects your firm from claims that could destroy its finances.

By knowing how much does lawyer malpractice insurance cost and figuring out what your firm needs, you can be sure that your policy covers all possible risks and feel safe knowing you’re covered.

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