No lawyer wants to be sued for any wrongdoing, especially when it comes to their clients being unhappy. However, statistics show that over the course of their careers, lawyers are expected to face at least one or two malpractice claims. So, what can they do to protect themselves? Arguably the most important feature is a Lawyer Professional Liability Insurance policy. This policy is meant to provide financial assistance in the event of litigation. However, most lawyers don’t know the extent of their coverage, what qualifies as a claim, or what their insurance will cover until a claim arises. In this article, we’ll explore the realities of this coverage and what it means for you and your practice.
Is a claim guaranteed a pay out by my insurance?
But having a malpractice claim does not always mean the lawyer did something wrong. According to a study of malpractice claims published in 2012 by the ABA Standing Committee on Lawyers’ Professional Liability, about 67 percent of the claims asserted against lawyers during a four-year period were abandoned without any payment to the claimant. That same study showed about 13 percent of the claims asserted against lawyers developed into lawsuits against the attorneys that were eventually dismissed, with a judgment in favor of the lawyer/defendant. The remaining 19 percent of claims, however, resulted in some sort of payment to the claimant, whether or not a suit had been commenced.
The remaining 1% of claims resulted in a payout to the plaintiff. Therefore, even if a claim arises against you, that doesn’t necessarily mean your insurance will have to make a payout or that your reputation will suffer. However, this does mean that you should consult with your trusted insurance professional to devise a strategy to respond and handle meritless claims. You might be found not guilty in a court of law, but that doesn’t mean there will be no legal fees proving your innocence.
What makes a claim?
The definition of a claim is broad, and doesn’t necessarily have to result from a lawsuit in which your practice is the one at fault.
For example, a claim may be defined as “a demand or communication to the insured for damages or professional services,” or “an act, error, or omission by any insured which has not resulted in a demand for damages but which an insured knows, or reasonably should know, would support such a demand”.
Regardless of claim type or severity, notify your insurance company as soon as you get word of the situation. This way, your agency can hire a professional to manage the claim from the start or get coverage underway to provide the defense you need in court.
In our next blog, we’ll go into more detail about necessary facts you should know about your professional liability insurance.
About ISU-The Olson Duncan Agency
At ISU-The Olson Duncan Agency, our goal is to provide clients with a total solution, not just a quote or a contract. We provide businesses and individuals with insurance and risk management solutions, and we aim to provide real value and build trustworthy, long-term relationships with our clients. To learn more about our services, give us a call today at (310) 373-6441 to speak with one of our professionals.