12-2 Purchasing a Policy

• Jurisdiction: United States

12-2 Purchasing a Policy

In most respects, a legal malpractice policy is no different than any other type of insurance policy.⁶ Nevertheless, a lawyer contemplating purchasing a legal malpractice policy should seek out the assistance of an experienced agent or broker.⁷ As with other insurance products, it is easy to make a mistake and wind up with either too little or too much coverage.⁸

12-2:1 Availability

In the early 1980s, many insurers suddenly stopped writing legal malpractice policies, while those that remained imposed price hikes of between 200% and 300%.⁹ As a result, in May 1987 the Florida Bar created the Florida Lawyers Mutual Insurance Company ("FLMIC").¹⁰ Today, FLMIC covers 4,821 Florida lawyers and 2,866 Florida law firms.¹¹ Some two dozen other admitted carriers also currently sell legal malpractice policies in Florida.¹²

12-2:2 Cost

In deciding what to charge for a particular policy, malpractice insurers consider a variety of factors. These include the lawyer's education, experience, geographical location, specialty, practice setting, prior insurance history, the amount of coverage sought, the proposed deductible, and the overall state of the insurance market.¹³ Anecdotal evidence suggests, however, that the average cost to fully insure one experienced lawyer is approximately $5,000-$10,000 a year.¹⁴

12-2:3 Application

An attorney interested in purchasing legal malpractice insurance will be requested by his or her agent to fill out an application. The application will inquire into the lawyer's background, practice, and previous claims experience. It also will ask if the lawyer has any other legal malpractice policies.¹⁵ As the insurer's decision to issue the policy, as well as how it prices the policy, is based on the information contained in the application, any misstatements or omissions may result in the policy being voided.¹⁶

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Notes:

^[6] See, e.g., Snyder v. Douglas, 647 So. 2d 275 (Fla. 2d Dist. Ct. App. 1994) (automatic six-month stay provision contained in Fla. Stat. § 631.67 applied to insolvent legal malpractice insurer). See also Interstate Fire & Cas. Co. v. Kluger, Peretz, Kaplan & Berlin, P.L., 855 F. Supp. 2d 1376 (S.D. Fla. 2012) (dispute between primary and excess legal malpractice insurers).

^[7] For an interesting case in which an agent prematurely cancelled a legal malpractice policy following the death of a l awyer, and therefore had to pay from its own funds a judgment against the lawyer, see Poe & Assocs., Inc....