1.3 Professional Liability and Other Insurance

• Library: The Virginia Lawyer: A Deskbook for Practitioners (Virginia CLE) (2022 Ed.)

1.3 PROFESSIONAL LIABILITY AND OTHER INSURANCE

1.301 In General.

Four of every one hundred Virginia attorneys will face a malpractice claim each year. In the average lawyer's professional lifetime, three to four claims will be asserted against him or her. Lawyers' professional liability policies not only provide indemnity coverage to pay claims or judgments but also pay for the cost of defending suits against lawyers.

If the prospect of a reputation-shaking malpractice judgment is not disturbing, the prospect of having a judgment extending for 20 years or more should be. Even if the attorney does not currently have assets, as a professional, he or she is an excellent prospect for satisfying a judgment in the future. Furthermore, having malpractice insurance is the responsible thing to do for clients. We all make mistakes. Having professional liability insurance allows the attorney to stand behind his or her work and protect his or her clients.

1.302 Types of Malpractice Carriers.

Some carriers are small, bar-related companies that deal closely with the Bar in determining what types of coverage to provide, what limits to make available, and other policy considerations. Other carriers are divisions within large insurance organizations that do not necessarily have such input and may or may not have the expertise and commitment of a bar-related entity. Each has its own advantages and disadvantages.

A.M. Best Company is an industry-recognized organization that rates insurance carriers on various factors, including financial stability. A review of A.M. Best's rating of insurance carriers may be a good indication of financial strength and is always advisable before the purchase of any coverage package.

1.303 Considerations When Buying Malpractice Coverage.

A. In General.

The attorney should remember that insurance is intended to protect against catastrophic loss. He or she should purchase a policy with sufficient limits to cover the loss on the case in the practice that has the highest potential loss if everything went wrong and the attorney were responsible for the pure economic damages. Interest on the loss should be included as well. The attorney is buying coverage for the most calamitous loss imaginable in his or her practice.

B. Indemnity Limits.

There are two numbers to look at when considering the indemnity limit (the amount that will be paid to cover a loss): a per claim limit and an aggregate limit. The aggregate limit must provide coverage above and...