Known also as “errors and omissions insurance” or “malpractice insurance," professional liability insurance protects law firms when being sued for alleged mistakes or omissions while providing professional legal services. Professional liability insurance is designed to cover legal fees, settlements, and judgments arising from alleged claims of negligence, errors, or omissions.

If an alleged mistake or omission made by a lawyer results in harm to a client, law firms may be held liable and may face a lawsuit. Even if the attorney or law firm did nothing wrong, they may still have to spend a significant amount of money in court defense costs.

Professional liability insurance provides financial protection to law firms in these situations. This can cover the costs of legal defense, settlements, and judgments, up to the policy limits. This coverage can help attorneys and law firms avoid financial ruin due to a lawsuit.

Many clients require their lawyers to carry professional liability insurance as a condition of doing business with them. This requirement helps to protect the client's interests if their lawyer makes a mistake that causes harm to the client.

The cost of professional liability insurance varies depending on several factors, including the number of attorneys in the firm, the amount of coverage needed, the type of law practiced by the firm, the firm’s location, the claims precedence compared to the areas of law practiced by the firm, the years of experience of the law firm’s attorneys, the firm’s risk management operations, the firm’s prior acts coverage date and the industry-wide risk factors and claims environment involved with the legal profession. In short, many factors go into the cost of a law firm’s professional liability insurance. Here are some additional details that commonly affect the cost of professional liability insurance:

• Areas of Law Practice: Your specific area of practice or how much of your business is specialized into a certain type of practice is considered when factoring rates for coverage.  Typically, a law firm that specializes in a certain type of law practice will receive a more competitive rate than a firm that's made up of smaller percentages of many different types of areas of law practice.
• Desired Coverage Limits: The amount of coverage you choose – or, your policy limits – will affect the cost of your premium. Higher limits usually mean paying a higher premium.
• Deductible: The amount of your deductible can also affect the cost of your premium. A higher deductible may lower your premium, but it means you will have to pay more out-of-pocket expenses in the event of a claim.
• Claims History: Having a history of claims (especially recent claims that have occurred in the last five years) may increase the cost of your premium regardless of whether the firm was found to be guilty of the alleged claim or successfully settled.
• Location: A firm’s location or locations may also affect the cost of coverage. Different states have different claims environments or may have unique risk factors for attorneys that can affect the overall cost.

The cost of professional liability insurance ranges from less than a few hundred dollars to several thousands of dollars per year, depending on the varying factors mentioned. This cost may also include additional coverage options, such as cyber liability.

It is important to scrutinize the underwriting process to accurately but strategically represent your firm’s business to the prospective insurance carrier.

It's important to remember that the cost of professional liability insurance is a necessary expense to protect lawyers and their businesses from the financial risks associated with lawsuits or alleged claims made against their practice. While an additional expense, it may ultimately save you money and protect the future of your business.

Professional liability insurance and general liability insurance are types of liability insurance that provide coverage for different types of risks.

Professional liability insurance is insurance coverage for professionals to cover claims of negligence, errors, or omissions that occur while providing professional services. This type of insurance is designed to protect professionals from financial losses resulting from claims (legitimate or alleged) of negligence or mistakes made while providing those services. Professional liability insurance is typically purchased by professionals such as doctors, lawyers, accountants, architects, engineers, and consultants.

General liability insurance provides coverage for claims of bodily injury, property damage, or personal injury that occur as a result of business operations. This type of insurance is designed to protect businesses from financial losses resulting from accidents that occur on their premises or as a result of their business activities. General liability insurance may cover things like slip and fall accidents, property damage caused by your business operations, or advertising injuries.

Generally, professional liability insurance provides coverage for claims of negligence, errors, or omissions in the performance of professional services. Policies range in coverage limits, and the definition of “professional services,” and may include various endorsements to further expand a law firm’s coverage. Each of these coverage factors will affect the annual premium pricing.  The way the policy limits are calculated or paid out can also change from policy to policy.

Here are some examples of what professional liability insurance may cover:

• Legal fees and defense costs: If a client sues a professional for an alleged mistake while performing professional services, professional liability insurance can help cover the costs of legal defense, this includes attorney fees, court costs, and other related expenses.
• Settlements and judgments: If found liable for a mistake or error, professional liability insurance can cover the costs of settlements or judgments, up to the policy limits.
• Breach of contract: Professional liability insurance can provide coverage for damages resulting from a breach of contract between the professional and the client.
• Errors and omissions: Professional liability insurance can cover claims resulting from errors, omissions, or mistakes made while providing professional services to a client.
• Negligence: Professional liability insurance can provide coverage for claims of negligence, such as failing to meet professional standards of care or failing to provide services in a timely or competent manner.

Professional liability insurance typically does not cover intentional acts or criminal behavior. In addition, policies usually have exclusions or limitations. It's best to have a licensed insurance professional review your quote options and help you compare various policies to ensure you are purchasing maximum coverage for the most competitive price.

Yes, Errors & Omissions insurance is a type of liability insurance that provides coverage for claims of negligence, errors, or omissions during the performance of professional services. It's another name for professional liability insurance or malpractice insurance.

While there may be some differences in the specific terms and conditions due to differing policies - errors & omissions insurance and professional liability insurance are terms generally used interchangeably to refer to insurance coverage that protects professionals from any claims of negligence, errors, or omissions that occur during the provision of professional services.

Alongside professional liability insurance, lawyers should consider several other types of insurance to protect their business:

• General Liability Insurance: General liability insurance provides coverage for claims of bodily injury, property damage, or personal injury that occur during business operations. This type of insurance is important for lawyers who have an office or meeting space where clients or other visitors may be present.
• Cyber Liability Insurance: Cyber liability insurance provides coverage for losses resulting from data breaches, cyber-attacks, or other cyber incidents. Lawyers who store sensitive client data, such as personal, financial, or medical records, are particularly vulnerable to cyber-attacks and should be encouraged to purchase this insurance.
• Employment Practices Liability: This insurance coverage is for claims of employment-related discrimination, harassment, or wrongful termination. Lawyers with employees or who regularly work with contractors could be at risk for these types of claims.
• Directors and Officers Insurance: This type of insurance covers claims brought against the directors and officers of a business. Lawyers who serve on the board of directors for non-profit or other organizations can purchase this insurance to protect themselves from claims brought upon them for this capacity.

A law firm’s specific insurance needs depend on a variety of factors, including the size of the firm, the types of clients served, and the services provided. Working with an experienced insurance consultant who specializes in business insurance will help determine the appropriate types and levels of insurance coverages for your business.