What's the right policy limit for your firm?

• Position: CAMICO Insurance: tip of the Month - Brief article

There are dangers of being under-insured and over-insured for professional liability. Being under-insured can expose the firm and/or its partners to too much adjudicated liability in excess of the policy limit. Being over-insured, on the other hand, can create a larger target for unwarranted litigation and provide less incentive for plaintiffs attorneys to settle a claim efficiently. An overly high limit might motivate plaintiffs to exaggerate their damages and make it harder to negotiate a reasonable settlement. It can also tend to result in paying higher premiums than necessary.

If the policy limit is sufficient relative to the net worth that can legally be...