Lawyer and Law Firm Insurance

Yes, there are several reasons a lawyer, attorney, or firm that handles legal issues may be required to carry insurance. Some of these reasons include:

• Your practice area mandates legal malpractice insurance. Your state, municipality, or city may require legal firms and attorneys to carry lawyers professional liability insurance or LPL, also called malpractice insurance or errors and omissions (E&O) insurance. Even when not required, you'll likely have to disclose whether or not your law office has this coverage, per your local Bar Association.
• You have employees and need workers' comp coverage. Most states require law firms with employees to carry workers' compensation insurance.
• You need commercial auto insurance coverage. Almost every state requires business auto insurance for vehicles owned by a law firm, and each state has its own requirements for how much auto liability insurance you need for any vehicle.
• You're asked to carry insurance or a bond by clients. Even if you're an independent contractor, your clients might ask you to carry insurance to make sure they're not affected by a malpractice claim. They also might request a fidelity bond if they entrust you with financial assets and other legal documents.
• Insurance is a crucial part of risk management. Accidental injuries and malpractice lawsuits can happen at any law firm, or to any solo attorney. Business insurance covers costly attorney’s fees and other expenses that could otherwise shutter your firm.

While the policies mentioned above, like workers' compensation and professional liability coverage, provide valuable protection for lawyers, attorneys, and law firms, businesses that offer legal services often also invest in the following types of coverage:

• Business income insurance can be included with your commercial property coverage or in a business owner's policy. This policy covers day-to-day expenses during a forced temporary closure from a fire or other covered peril. You may also see it called business interruption insurance.
• Hired and non-owned auto (HNOA) insurance is a must have if you drive your personal vehicle to meet clients. That's because your personal auto policy won't cover work-related claims. HNOA covers vehicles used but not owned by your business, including personal, leased, and rented vehicles.
• Employment practices liability (EPLI) insurance covers employment-related issues, such as wrongful termination, discrimination, and other violations of employee rights.
• Directors and officers (D&O) insurance protects officers and board members financially in the event of a lawsuit related to a decision they made on behalf of your business.
• Commercial crime insurance, which includes fidelity bonds, protects your clients from dishonest employees. You can also add commercial crime insurance to your property insurance to safeguard your own business against employee theft and fraud.
• Commercial umbrella insurance boosts the coverage of your general liability, commercial auto, or employer's liability insurance when the policy reaches its limit on a claim.
• Surety bonds act as a contract between a business, a client, and an insurance company. They guarantee the surety company will reimburse the client if the business fails to deliver contracted services.

Although not an insurance policy, another coverage to consider is a hold harmless agreement. Sometimes called an indemnity agreement, this protection ensures your clients won't sue your business in certain situations.