Lawyers Professional Liability Insurance – Guest Blog
This is a guest blog from Harold Mayhack, a colleague here at ISU/The Olson Duncan Agency. Harold received his Bachelor of Arts in Business Administration from the University of Strathclyde in Glasgow, Scotland in 1985. He spent several years underwriting lawyer’s professional liability insurance before becoming an insurance broker specializing in the insurance needs of law firms. For the past twenty years Harold has worked with local law firms; assisting with all of their insurance and risk management needs. He has presented to law firm groups and members of the Association of Legal Administrators and has been published in legal administrators’ newsletters. He is a member, and former local steering committee member, of the Professional Liability Underwriting Society; the Insurance Brokers & Agents Association and the ISU Network.
This is the first of several blogs that will focus on the pricing mechanisms for lawyers’ professional liability insurance; from the basics to some more subjective items underwriters take into consideration. Essentially, we are going to review the application as it impacts the final cost of your insurance with the hope that you will know the impact of your answers and what information you can provide to help underwriters offer their best pricing; they really do want to write your law firm’s insurance. We will also touch on a few questions that can qualify or disqualify your firm from some of the ‘preferred’ programs.
The first, and I believe the most important, consideration for law firms to consider when you complete your applications is the attitude brought to the process; why are you doing this? The application is your opportunity to tell the story of your law firm; why should an underwriter want to insure you and why should they offer you the best pricing they have available? Many of the applications we see include the basic answers but no additional details; especially for mid to large size firms, firms with higher hazard areas of practice or claims, the subjective picture we paint can be as important as the objective answers in the application. Why are you different? Every principal or firm administrator I meet is very proud of their firm; yet that often does not come across in their application. This is the information we want to provide to underwriters.
We will include this ‘attitude’ consideration in each of the sections that follow. Some things to keep in mind are; you started your firm for a reason, let’s explain that reason. You hired your attorneys and non attorney staff for a reason, let’s explain that. You manage your firm and its’ structure the way you do for a reason, again let’s explain that. If you have claims let’s explain why. Yes, this takes some time but it pays dividends in the number of insurance offers you receive and the premiums and terms of insurance you will have to consider.
Beginning with the basics, APPLICANT INFORMATION; your firm’s name, is it correct in the application? Most of the lawyers’ professional liability insurance policies available state; ‘we shall pay on behalf of the insured’. Insured is typically defined as the Named Insured, which will be listed on the policy’s Declarations page. This seems obvious but it is not unusual to see the Named Insured listed incorrectly. This becomes more important as we look at the definition of insured which will typically insure principals, employed attorneys, attorneys ‘of counsel’ and independent contractors among others and will include the limitation ‘for legal services on behalf of the Named Insured’.
Also requested in APPLICANT INFORMATION, your contact information; address, phone number, contact name, email and often year established. Most importantly, this is the information the insurance company will use to issue legal notices they are required to mail directly including; notices of non renewal, coverage changes among others. However, they also impact your premium. Most insurance companies have some form of territory rating; metropolitan areas like Los Angeles or San Francisco are often rated with a higher premium than outlying areas. Your year established is used as one factor along with your insurance history in the consideration of prior acts coverage. This date should be the establishment date of the earliest entity to which the current Named Insured is the majority successor in interest to ensure the policy will include the necessary prior acts coverage.
The next few blogs on pricing lawyers professional liability insurance will take us through the remaining application questions and several of the key supplemental applications. If you have any questions about any of the issues raised here please feel free to call me at any time. I would also appreciate any comments or feedback you would like to share.