In a world of Yelp Reviews, 15-minute car insurance and Amazon merchandise comparison shopping, it’s easy to look at your professional liability coverage as a commodity to be “shopped around.” After all, if you can save a little money on your premium what’s wrong with that in these uncertain times?
The issue, like every decision we make, is that there are ramifications. If you don’t fully understand how commoditizing your insurance protections impacts your risk, the potential harm to your legal practice can be considerable. And focusing primarily on premium is often the first mistake.
Whether seeking direct coverage with a carrier or acting through an agent, attorneys must consider their risk exposure and any potential long-tail claims. A new carrier may require a potential insured sign warrants indicating the insured is unaware of any issue that might result in a claim. Those warrants may preclude coverage if a claim later arises. Some carries might also include specific language in new policies that preclude or limit prior or impending litigation matters, leaving attorneys and their practices exposed and without appropriate risk mitigation.
Also, carriers may look poorly on claims that result shortly after an attorney or law practice activates new professional liability coverage. If the claims are substantial or numerous, the end result of saving a few dollars on premium may be denied or cancelled coverage.
The same advice holds when renewing professional liability policies. A trusted agent or broker should go beyond the simple transaction to review any changes in your firm’s practice that may affect exposure, as well as discuss new and emerging risks. If the only thing you are checking on a renewal is if the premium went up, you’re not going far enough.
While cost savings are important, just like other types of insurance coverage – life, home, auto, etc. – attorneys must ensure they are adequately covered for the types of risks inherent in their work. Look to your trusted, experienced agent or broker to help guide you in mitigating these risks through insurance coverage that best protects you from past, current and future risks.