Renewal Guide: Life after a claim on a Lawyer’s Professional Liability (LPL) Policy
The biggest reason for having insurance is in case you need it, which means making a claim. However, claims make your firm’s insurance renewal substantially harder. Our quick guide breaks down the preparation you can do in advance of renewal time.
1. Gather five (5) years of loss runs.
Loss runs are an insurance document showing the cost of a claim (or lack of claims) during a policy period. There are a few important aspects to be aware of when requesting loss runs:
If your existing agent is handling the renewal, they should handle this for you.
If you are switching agents, requesting loss runs from your old agent will be a clear indication that a change is coming, and they may be less inclined to assist.
You can request loss runs from carriers directly.
Ensure a loss run document indicates the policy period(s) covered.
In some cases carriers may require 10 years of loss runs.
2. Document what caused the loss.
Underwriters will want to know what led to the loss, including a substantial level of detail. Was a filing date missed due to poor docketing practices? Did an underqualified legal assistant make a simple mistake?
3. Tell a story about how you will prevent this type of claim again.
After any claim, your firm should sit down and evaluate what compensating controls would have prevented it. Dual docketing systems are a common practice for firms, or even automated systems such as LawToolbox. Employee training and supervision processes are important for every time. For an insurance carrier, one of the biggest fears for a claim is that it may occur again, so a description of how your firm is preventing that occurrence will help your pricing.
4. Start EARLY.
Not days early, not weeks early. Months early. Start gathering your loss runs and claims details so they are ready to provide 60 days from your renewal date.
5. Be ready for lots of paperwork.
Oftentimes Beltex can quote or renew a lawyers professional liability policy with an application packet of 5 pages or less. When a prior claim was involved, this quickly balloons, sometimes to 15+ pages per carrier quoted.
6. Look for multiple quotes.
Lawyers professional liability is very standardized for smaller firms (<$25mm/year in revenue) and typically converges around a similar price, but not always. One carrier may favor certain practice areas, while a different carrier’s underwriter has a more nuanced understanding of the compensating controls in place. For example, a recent firm that Beltex began working with received five (5) quotes:
3x for $10k premium
$6000 premium
$4000 premium, however after further underwriting around the claim was raised to $6000 also
The lesson here? The first quote received was for $10,000 but additional diligence resulted in a savings for the firm (at the expense of extensive paperwork.)