Legal malpractice insurance protects professionals from the cost incurred to pay for damages. Knowing its rates is important so that you can have a good idea of the insurance rates prevalent today and that can help you plan in a better way.
Malpractice means wrong actions which are carried out by an individual, thereby resulting in injuries or damages to a client, at the time of providing services to him. The professions which are most prone to litigation are doctors and attorneys and so it’s important that they carry malpractice insurance. Over the years, legal malpractice insurance rates have risen steadily due to the realization that these professionals can be sued. There are different rates and they depend on the state where a person lives in. Many a time, an attorney may choose the state in which he wants to practice depending on the insurance costs.
How Much it Costs?
There are several insurance companies which offer malpractice insurance, but the deductibles and insurance rates offered by each company differ. This type of insurance pays for defense of an attorney, besides any fines in terms of money which he may have to pay. Let’s take an example. Say an attorney, due to lack of knowledge of a particular law, lost a lawsuit. If the client files a lawsuit against the attorney, he is liable to pay the expenses if found in error. This is where he would be saved of a hole in his pocket, as the insurance company would pay his client.
One of the most important factor which determines the cost of the insurance is the size of the firm. The insurance rate offered for an attorney working in a large firm is comparatively lower than for the one working in a mid-sized firm or for those who practice alone. Usually the rates are in the range of US $4,000 to $8,000 every year. There are several local bar associations which offer it at a discount, but that too depends on the location of the legal practitioner.
There are several factors which are taken into consideration to determine the cost. Different insurance providers have their own set of premiums, and that’s based on the number of incidents wherein a litigation has been filed. Moreover, these insurance companies also assess the risks associated with each individual lawyer, whether it’s a real estate attorney or the one who specializes in crime, companies, etc. This means that the insurance providers take a good look at the field in which an attorney specializes.
Some may specialize in divorce, while others in personal injury, and real estate. A personal injury lawyer who deals with personal injury claims for his clients, is more at risk of getting into a legal soup. A divorce attorney, who represents his client in a lawsuit that involves millions of dollars alimony, is also at the risk of being sued for the damages, if he loses. Data which has been provided by the insurance providers have shown that lawyers who deal with cases related to property damage, besides those who deal with personal injury, pay the highest insurance rates.
Another factor which is taken into consideration is the length of service. An attorney who has been in the legal profession for a long time, will need to pay less as compared to the one who has not served that long. Moreover, the activity in which he has been engaged in when the omission or error took place, is also taken into consideration while deciding the amount which he has to pay to his clients.
So, all in all, legal malpractice insurance is beneficial if they find themselves defending a litigation against their clients. It serves as a protection against damages, which they may have to pay. But it’s important to note that, before going for this type of insurance, you should read the terms and conditions, so that you know the amount you need to pay, and any penalties which may be there if you don’t pay the premiums on time.