You can insure just about anything. Your law practice is no different, so you’ll need to explore the myriad general business insurance products available for your business. Some of these aren’t optional. Some of them shouldn’t be. Still others are unnecessary or luxuries that you may choose not to afford depending on your appetite for risk and your budget. But there is more to the insurance question than just selecting a legal malpractice insurance provider (which we have covered in some depth here).
For all of these insurance products, bring your curiosity and find someone you can trust to make sure you have the right insurance policies and coverage for your specific firm. We encourage you to comparison shop, ask people in your network, and sort out any prior acts coverage issues that need sorting. Get an understanding of a potential policy’s limits and rules (for example, does the limit include or exclude the cost of defense? Is it an “inside” or an “outside” limit? Who gets to control the case?), and do some thinking about your appetite for risk and whether—and how much—insurance gives you peace of mind.
Then, find an independent insurance broker with experience working with professionals and get your insurance portfolio sorted out. As with any insurance, it is both brutal and crucial to read your policies in detail. They really do outline essential distinctions in your coverage that you’ll want to understand. The proposal your broker sends will probably include options for policies covering:
Business Owners Insurance
In addition to their malpractice insurance, which protects in the event of professional negligence, most lawyers and law firms also carry a Business Owner’s Policy (BOP). That coverage protects your law business like your homeowner’s policy protects your home and its contents. A BOP policy generally includes:
General Liability Insurance
Your firm’s general liability insurance policy offers coverage to protect your firm from lawsuits claiming injuries or property damage that result from your business operations (a slip and fall in your office, slander and libel, etc.)
Commercial Property Insurance
This policy covers the premises where you’ve parked your firm and the things you use to conduct business, including your library, furniture, and equipment (whether leased or owned).
Business Income Insurance
Business income offers coverage that can help you recover lost income when you can’t practice law because of covered property damage.
Commercial Umbrella Insurance
An umbrella policy provides extra coverage if the rest of your general business insurance coverage is inadequate to cover a particular claim in its entirety. It is designed to protect you from significant allegations and lawsuits that exceed your underlying policy’s coverage limits.
Computers & Media
Like it sounds, this coverage offers protection for your technology infrastructure by covering loss of data and software, physical damage to hardware, coverage for portable equipment used in your business (your laptop, iPad, and phone, for example), and damages caused by viruses and malware.
Accounts Receivable General Business Insurance
For many law firms, this is the biggest single asset on the balance sheet. This insurance policy can prevent unpredictable losses and cover you when customers fail to pay what they owe because they went out of business, became insolvent or filed for bankruptcy, or changed ownership.
Valuable Papers & Records
No mystery here: this coverage protects your stores of valuable (and tangible) papers and records. This coverage doesn’t cover electronic documents. Many commercial property policies exclude coverage for the cost to replace or restore information on valuable papers and records. And, despite our frequent suggestions that they convert to a paperless law firm, many lawyers still have gobs of important documents and records kicking around their offices that could cause heartburn if lost.
This is self-explanatory, right? But did you know that your personal automobile insurance policy won’t cover your business driving? So even though you may have a tremendous personal auto policy, if you cause a massive 30-car pileup on your way to a deposition, you’re probably going to have some coverage issues. This general business insurance policy is sometimes included in your BOP and is a no-brainer.
If one of your employees is involved in an accident while using their own (or a rented) vehicle for business purposes, you’ll be covered under this policy. Their personal insurance policy may not cover an accident on their trip to the post office.
Tenant’s Legal Liability
Here’s where you’ll find coverage for damages from an insured event to a rented premise, which would otherwise probably be excluded under your bodily injury and property damage coverage and other general business insurance policies. So, if you negligently start a fire in your trash can after igniting a picture of the hairless cat at the center of your client’s heated animal-custody dispute, you will look to this coverage to pay for damages in the space your firm occupies. For damages beyond the walls of your leased space, the general liability policy will have you covered.
Data Breach Coverage
Gotta tell you, this one feels important. We’re gathering more data, the breaches are getting bigger, the regulations and notification procedures are getting more onerous, and post-breach obligations are getting more expensive. This coverage helps you with that.
Your employees are going to be awesome. But if they aren’t, having some insurance protection in place for that makes all kinds of sense. You probably won’t find that coverage elsewhere in your general business insurance portfolio, so make sure you get this endorsement if you’ve got employees.
Employee Benefits Liability General Business Insurance
This policy has you covered if you’ve committed errors or omissions in administering your employee benefits program.
This one gets people’s anxiety levels elevated in a hurry. Check out our post on “Health Insurance Options for Solo Attorneys” for more information about why a full-on freak out isn’t strictly necessary.
Here’s what’s weird: disability claims are some of the most common claims in the entire insurance industry under your general business insurance policies. You’ve got a one-in-four chance of becoming disabled before you turn 67, which is true regardless of gender or race. You should have a policy for yourself, and you should offer it as a perk to your employees. You can be generous here, too. Most run-of-the-mill disability policies are terrible.
Workers’ Compensation Insurance
This insurance product is mandatory in most situations and offers wage replacement and medical benefits to employees injured while working for you.
Also mandatory, you’ll pay taxes toward your state’s unemployment fund, which pays benefits for eligible workers.