Lawyer’s Insurance: An Introduction

We all know how busy an attorney’s schedule can be. From researching case studies to reading witness statements, it’s understandable why most attorneys don’t have the time for lawyer’s insurance. But that doesn’t mean you should operate your firm year-round without having the right financial protection in place.

Insurance is crucial to almost every business as it helps minimize the risk of financial loss. But law firm insurance can be quite a complex topic, making it difficult for lawyers to acquire sufficient coverage. If you’ve been setting aside your firm’s insurance needs, now is the time to take action.

This article will tackle the basics of law firm insurance so that you can protect your law firm against uncertainties and unforeseen financial incidents.

Why do you need lawyer’s insurance?

As with any business, there’s an element of risk involved when running a law firm. Cybersecurity threats, malpractice claims, and human error are some examples that could put a firm in financial distress. Thus, it should be in your best interest to protect your firm against these types of scenarios.

Effective risk management is crucial to keeping your business afloat, and law firm insurance is one step in minimizing financial mishaps. You can focus more on doing legal work and serving your clients more efficiently when you have adequate coverage.

In addition to managing risks, some states require lawyers to have professional liability insurance coverage, so it’s worth checking with your local laws to ensure you’re following insurance requirements.

What should you consider when buying lawyer’s insurance?

The insurance needs of a law firm are vast, and the policies a lawyer needs will depend on the level of risk they face. For example, a new lawyer with a small amount of legal work will likely have cheaper premiums than an experienced attorney who handles multiple large cases.

When it comes to lawyer’s insurance, you want to do as much research as possible. Take the time to understand the level of coverage an insurance plan provides so that you don’t leave any gaps and end up underinsured. The American Bar Association provides a checklist for attorneys to ask potential insurance providers when purchasing professional liability insurance.

Lawyer's Insurance

Insurance policies that a lawyer needs

While there’s no one-size-fits-all solution for lawyer’s insurance, there are a couple of insurance policies that we believe are a must for any attorney or law firm. Consider these policies when buying insurance so that you can confidently secure your assets.

1. Professional liability insurance

Professional liability insurance (also known as legal malpractice insurance) should be your main priority when purchasing an insurance policy as it protects you from claims resulting in legal malpractice. From a conflict of interest to misrepresenting clients in court, the last thing you want is to get caught in a malpractice suit without any form of coverage.

When you have professional liability insurance in place, you can protect yourself from trial-related expenses and legal defense costs. Any settlements or damages awarded against your firm will be covered by the policy as well. Keep in mind that professional liability insurance usually doesn’t cover fines and penalties, so read the full policy details and double-check to make sure.

2. Business Owner’s Policy Insurance (BOP)

If you operate a law firm, securing a Business Owner’s Policy Insurance is an absolute must. A BOP policy covers the core essentials like general liability insurance, commercial property insurance, and business interruption insurance. A BOP policy lets you bundle key policies together, thus helping you obtain core coverage at a lower cost.

General liability insurance protects your law firm against property damage or bodily injury claims. For example, if a client were to slip and fall inside your law firm, they may sue your business for damages. With general liability insurance in place, you can secure their medical bills without using your firm’s resources.

Commercial property insurance protects your assets like hardware and computers in the event of a theft, fire, or natural disaster.

Business interruption insurance protects your firm from lost income when your business cannot operate. Whether due to a natural disaster or a civil authority shutting down your firm, business interruption insurance will cover operating expenses and help keep your law firm afloat.

3. Cyber liability insurance

As an attorney, it’s your responsibility to protect your clients’ personal information. Unfortunately, cyber-attacks are widespread in the legal industry, as 26% of law firms reportedly experienced a security breach. Not only is it important to keep your practice secure, but you also need to obtain the right coverage to protect your firm from data breach claims.

There are plenty of ways to enhance your law firm’s data security. One is to store your client’s data in the cloud since the files are encrypted, making it difficult for hackers to access sensitive information. Another step is to practice secure file sharing using enterprise-grade file sharing solutions.

With adequate coverage and the right approach to cybersecurity, you can mitigate financial losses from data breach suits.

4. Directors and Officers Liability Insurance (D&O)

Owners of a law firm should strongly consider Directors and Officers Liability insurance as it helps protect them and their business against potential lawsuits from its lawyers. Law firms carry a unique risk in that the attorneys in the firm are the ones capable of bringing a suit against the management.

The policy helps cover defense costs or reimburse settlements in the event of a claim. A D&O policy should be tailor-made for each law firm to help mitigate risks that could potentially harm the firm and its board directors.

5. Employment Practices Liability Insurance (ELPI)

As your law firm grows, you’ll likely bring in attorneys with varying personalities and interests. To ensure your firm doesn’t succumb to employment-related suits, you’ll need to secure employment practices liability insurance. ELPI insurance protects your firm from claims linked to a violation of employee rights such as:

  • Harassment
  • Discrimination
  • Wrongful termination
  • Failure to promote

It’s also a good idea to secure third-party coverage against claims from outside your firm. Even if your firm has a low turnover rate, having employment practices liability insurance gives you peace of mind knowing your insurance covers employment-related suits.

6. Worker’s liability insurance

Almost every state requires worker’s liability insurance, so securing this policy for your law firm is mandatory. While the physical risks of working in a law firm are few and far between, that doesn’t mean you should leave a gap in your insurance coverage.

Accidents can happen, and worker’s liability insurance will protect your business if one of your employees sustains an injury inside your firm or while fulfilling their legal responsibilities. Worker’s liability insurance is also one of the cheapest policies available, making it accessible to every law firm out there.

How much does a lawyer’s insurance cost?

The cost of lawyer’s insurance varies depending on the insurance provider, the size of your firm, the risks you carry, and so on. To get an accurate picture of your insurance cost, we recommend consulting with an insurance broker to discuss your needs. It’s also worth obtaining quotes from different insurance providers so that you can compare prices and get the best deals for you.

Prior claims experience plays a role in your insurance cost. The number of claims, how much the claims cost, the nature of the claims, and the degree of your law firm’s fault in the claims are key determining factors in your overall premiums.

Your experience as a lawyer will also play a role in how your premiums will turn out. As we’ve previously mentioned, experienced attorneys handle more complex cases and work with more clients, thus exposing them to greater risks than new attorneys do.

It’s not necessarily about the price for lawyer’s insurance. It’s about securing the right policies so that your insurance needs are well-covered. Because law firms carry the risks of running a business (as well as the unique risks of being legal professionals), it’s wise to invest in insurance to limit the potential of financial loss down the line.


Navigating the world of lawyer’s insurance can be pretty challenging at first. But when armed with the right information, you can secure adequate protection against any accidental losses. Part of effective law firm management is proper risk management, so be sure to refer to this article to understand which insurance policies best fit your needs as an attorney.

Accurate bookkeeping is crucial to maintaining the profitability of your law firm. If you need any help with expert bookkeeping services, our team is here to assist you. Fill out the form below, and we’ll get back to you as soon as possible.



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