Business Insurance for Lawyers

Read our Advertiser Disclosure.
Contributor, Benzinga
September 25, 2020

As a lawyer, you’re often able to see risks where others might miss the tells, but many threats to your business are tough to predict. 

Protecting your law firm isn’t a 1-person job. The right combination of insurance policies can shield your law business against potentially large financial losses, allowing you to focus on serving your clients and growing your law practice.

Use Benzinga’s guide to understand where to find risk and to help you choose the best insurance for lawyers and law firms.

Best Lawyer and Law Practice Insurance

Many risks are universal whereas others are more prevalent for certain businesses. The coverage you’ll need to protect your law practice may be different from the needs of other attorneys. 

Compare quotes and policy features on coverage customized to the needs of your law firm.

Types of Insurance for Lawyers

Business insurance uses tightly-defined policy types to provide coverage. Policies typically exclude coverage for broadly-defined risks, instead covering smaller risk groups with separate policies that dovetail to better protect your law practice at a more granular level. This specialized coverage structure also helps keep coverage more affordable because you don’t have to pay for coverage you don’t need.

A large firm has different insurance needs than a solo attorney, but you’ll still find some overlap in the coverage for either situation. The type and scope of work you do can also guide coverage needs. For example, experienced attorneys may face larger risks as cases become more complex or as billing hours increase when compared to a less-experienced lawyer.

Consider these types of insurance to protect your law practice. 

General Liability Insurance

Slip and fall accidents are among the most common types of risk covered by a commercial general liability (CGL) policy, but this policy guards against many types of accidental bodily injury to others. 

But your CGL policy can’t protect against worker injuries, injuries caused by vehicles or liability due to many types of worker actions. You’ll need separate policy types to protect against those kinds of losses.

Your general liability policy also protects against losses caused by accidental damage to the property of others. Note that a general liability policy doesn’t cover these types of damages due to an automobile mishap.

Coverage limits typically start at $1 million per occurrence with a $2 million aggregate limit, but many lawyers choose higher coverage limits. Liability coverage usually covers the cost of your defense as well, with defense costs falling outside your coverage limit so your legal expenses don’t reduce your available coverage.

Commercial Property Insurance

Use of leased space is common for law firms, but a commercial property insurance policy can protect your law practice whether you own your real estate or lease space. This coverage insures your building — if owned — as well as the building’s contents, including improvements, furnishings, equipment, supplies and more. Expect coverage for common risks like fire, water damage due to burst pipes, wind and hail, vandalism, theft and more.

Less common risks like flooding or earth movement aren’t covered by a standard commercial property insurance policy. If you’re in an area where these risks are a concern, ask about dedicated coverage.

Business Owners’ Policy

A business owners’ policy (BOP) packages both liability and property damage coverage into one policy, combining the liability coverage of a CGL policy and the property coverage of a commercial property insurance policy. A combined policy is often more affordable and easier to manage without sacrificing customizability.

Professional Liability Insurance

Also known as errors and omissions coverage, a professional liability policy protects your practice if the business actions (or inactions) of you or your team cause financial harm to others.

For doctors and lawyers, this coverage is also known as malpractice insurance. Coverage tailored to the risks of each industry or profession as well as individual risk. Rates vary based on the type of law you practice. For example, criminal law attorneys tend to have lower coverage costs than those who handle intellectual property cases.

Discuss your insurance needs with an experienced agent before binding malpractice coverage, particularly if you’ve changed firms or think you might change firms. An incomplete malpractice strategy can leave potentially costly coverage gaps. The American Bar Association offers an FAQ which discusses when coverage applies and how a well-planned strategy can protect your practice.

Cyber Liability Insurance

In the digital age, small businesses and professionals are often targeted by hackers seeking personal or financial records. Cyber liability insurance can cover damages due to data breaches but can also cover losses caused to others due to transmitting a virus and similar risks.

Commercial Auto Insurance

If your firm owns vehicles, you’ll need a commercial auto policy in the firm’s name. A commercial auto policy covers business-related risks that personal policies won’t cover. Liability limits for commercial policies are also higher than you’ll find for most personal auto insurance policies.

Non-Owned Auto Insurance

In cases that a firm employee must use their personal auto for business, a non-owned auto insurance policy can cover claims that occur during business use of the vehicle.

Workers’ Compensation Insurance

In most states, businesses with employees must carry workers’ compensation coverage. This policy can protect both the firm and the worker. The firm is shielded against many types of work-injury lawsuits while workers benefit from a fixed compensation schedule if they suffer an injury on the job.

Employment Practices Liability Insurance

Employee-related liability risk goes beyond workplace injuries. You can also face risk for lawsuits based on discrimation, wrongful termination and similar claims. An employment practices liability insurance policy dovetails with your other liability insurance policies to better protect your law practice if you face these risks.

Directors and Officers Insurance

The buck stops at the boss’s desk, but liability may not be limited to the firm itself. If a director or officer is sued personally by an employee, investor or another party, directors and officers (D&O) insurance helps protect the assets of law firm leaders and their spouses.

Commercial Umbrella Insurance

A commercial umbrella policy expands the coverage of multiple underlying policies simultaneously. For example, a $1 million umbrella policy can increase the coverage limits for a commercial auto policy and a general liability policy by $1 million each. 

Coverage flows where it’s needed but the base policy bears most of the claim risk, so umbrella coverage is more affordable by comparison to the base coverage.

Cost of Insurance for Lawyers

Insurers consider broad factors ranging from industry and location to individual factors like your experience and claims history — and maybe even your credit in some states. Coverage limits play a role as well, but there often isn’t a linear relationship between coverage limits and the cost of coverage. 

Most policies cover more than 1 risk with varying odds of a claim for each risk type. Additionally, the risk of a loss for the insurer is higher on the first dollar of coverage you purchase than on the last dollar.

The type of policy you choose also drives premiums. Your premium is the amount you pay for your policy. Workers’ comp policy costs vary based on payroll, whereas general liability insurance premiums vary based on top-line revenue.

Policy typeAnnual costCoverage limit
Malpractice insurance $1,000 to $2,000$100,000 per claim
General liability insurance (small firm or solo)$500$1 million per occurrence
Commercial property insurance$750$60,000
Business owners’ policy$1,200$1 million liability per occurrence$60,000 property

Malpractice insurance costs typically increase as you gain experience and take on larger or more complex cases.

For some coverage types — typically auto and property, you can manage insurance costs by adjusting your deductible. The deductible is the part of the claim you pay. By assuming more risk yourself, you can often save on premiums.

Bundling refers to buying more than one type of coverage from the same insurer and often results in a discount on one or more of the policies purchased. As another benefit of bundling, policies from the same insurer may fit together better, leaving fewer coverage gaps to address.

How Insurance for Lawyers Works

Although many agents identify malpractice insurance as the most important coverage type for attorneys, there isn't a single kind of insurance for lawyers. Instead, you may need multiple policies customized to meet the specific needs of your practice. 

Insurance is the transfer of risk from the individual to a group, where scale offers a better understanding of how often losses happen and how much losses cost. On a single-business basis, potential losses are impossible to predict. By using large groups of insureds, insurers can estimate the annualized cost of potential losses and put a price on that risk.

A single unexpected claim can break a young practice or even damage a well-established firm. Insurance provides a way to make risks a manageable and predictable annual expense.

Choose the Best Lawyer and Law Firm Insurance

For many types of businesses, a liability policy or a business owners’ policy provide basic protection. For law firms, you’ll need a protection strategy built around your malpractice coverage. 

Compare quotes from multiple providers but also consider coverage limits and policy features before finalizing coverage for your law practice. Start with our recommended providers to secure your policy today.