Attorneys may choose to go without malpractice insurance in the mistaken belief that their close relationship with clients makes them immune to claims. An attorneys may believe that the chances of facing a claim are low. But consider that the average cost of defending a malpractice claim exceeds $80,000.
Legal malpractice insurance costs vary widely. No two attorneys even with a “clean” record are going to pay the same. The key factors affecting premium cost are:
- Number of attorneys in the firm
- Claims history
- Practice areas
- Number of years maintaining continuous claims-made coverage
- Limits
- Location
- Type of clients
The costs for different practice areas differ 5 to 10 times from one practice area to another. Criminal law and insurance defense are low costs practice areas; with Securities Placement, Class Action Work and Intellectual Property being the highest cost practice areas.
Premiums start for as little as $200 to $500 for a claim free attorney without coverage in lower risk practice areas but expect premiums to rise over the first 5 to 7 years due to step-rating. With adequate limits the average costs for a fully rated attorney should be $1,200 to $2,500 per year. Attorneys in higher risk practice areas should expect to pay around $3,000 to $10,000 per year. These premiums vary by state and location in the state based on the insurer’s past claims experience. And remember that law firms are insured as an entity and the cost is on a per-attorney basis.
For most attorneys, this cost is small versus the risk to one’s assets, just one coffee per week for that 1st year of coverage. For attorneys, Malpractice Insurance is Sleep Insurance.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080