Is your house in order - Insurance
The one insurance all attorneys should know that they need is Professional Liability a/k/a Malpractice Insurance. However, when you are opening your own shop what insurance do you need then? What needs to be covered? Who needs to be covered? Good questions. General Liability/Business Liability: There are varying amounts of coverage you can get under a General Liability policy- basic, broad or special form.
Basic covers loss due to fire, storm, smoke or vandalism and usually nothing else.
Broad coverage may cover a little more such as burglary/break-in, water damage, etc.
Special form usually covers all the perils above and then some, including on-site injury, replacement of damaged equipment and employee loss or theft. This is the type that most law firms choose. Exclusions to this type of policy include most major disasters such earthquake, war and nuclear hazard.
Speaking of employee theft. Although, no one would like to think an employee would steal from a firm- it does happen. If you have employees (even just one), it is important to determine if this coverage is included in your general liability policy and what the limits are. If you offer a retirement plan to your employees, you will also need to make sure that you have ample fiduciary insurance coverage as well. This is usually a requirement for many “employer sponsored” 401(k) matching programs.
Workers’ Compensation Insurance: Under Virginia State Law any employer/business with more than two employees is required to obtain workers’ compensation coverage. An employee includes full-time and part-time workers, seasonal and temporary, minors, trainees, immigrants and working family members. Many small law firms may not have more than two employees; however, as they grow, this coverage is something they should keep in mind.
Cybersecurity Insurance: There is no denying that everyone is moving more and more to the digital age. Business IT operations are being handled remotely. Servers are being moved off-site and into the “cloud”. Communications are being handled through emails, documents shared in on-line folders, and meetings via web-interfacing. These technologies are making the practice of law more efficient, but it also makes firms more vulnerable to cyberattacks and malware.
The need for cybersecurity insurance is growing. Like general liability insurance, there are many types of coverage you can obtain for your practice. It can cover acts performed first-party (i.e. “in-house”) such as downloading a virus/malware/spyware. It can also cover third-party threats, such as breach of client’s personal data.
It is important for you to understand how you are using technology to support your firm and what information could be at risk. Having cybersecurity insurance can protect a law firm against business interruption, damaged equipment and claims against breached personal information.
There are many more types of insurance policies for law firms. The larger the firm, the more policies available. Any owner or manager of a law firm should consult with a licensed insurance broker to determine the best coverage for their firm.
Please contact me, if you wish to discuss law firm insurance coverage or any other matters regarding managing a law firm.
adh-consulting, llc is a consulting firm which supports solo and small law firms in making their practices efficient and effective through admin/office management, metrics and training.
