7 Habits of Highly Effective Professional Liability Insurance Applications

Your professional liability application is the single largest piece of information that insurance company underwriters use to determine what premiums and terms they offer.  As brokers, we spend a considerable amount of time helping our clients put their firm in the best light possible with their application.  This is a time consuming process for all involved but delivers large returns on the investment of time.

1)  Area of Practice.  There are broad areas of practice categories that are viewed by insurance companies as the riskiest, i.e.: SEC, IP, Plaintiff, etc.  What you might not know is that within those categories, some areas of practice are NOT viewed as risky.  For example, within the broad SEC category, private placements are not charged as a high risk practice.  Go though each of these areas with your broker to provide further information where needed to make sure that you are not overcharged unnecessarily.

2)  Claims Questions.  Make sure that you answer all of the questions here.  Do not just attach the legal papers and say, “see attached”.  Underwriters do not read the papers.  Most importantly, explain what you’ve done to avoid claims in this area of practice.  This will help your broker make the argument that this type of claim is less likely to recur.  Bonus tip: read the time period requested carefully.  Some applications ask for 5 years of claims only.  If so, don’t send in 6 or 7 year old claims.

3)  Expand the questions.  Though most of the questions are Yes or No – feel free to explain.  For example if the question asks, “Do you send Declinations to all potential clients?”  Though the answer might be NO (since you don’t do it for ALL potential clients), you should provide when you do provide declination letters.  For example, many firms do provide declination letters to potential matters if they met in person with the prospective client.

4)  Executive attention.  The trend emerged in the 90’s for law firm executives to delegate the application to non-executives.  This resulted in many costly errors and too high premiums for law firms.  Executives and Partners are the best equipped to understand the intent of the questions and fully answer the questions and categorize the areas of practice most efficiently.  They are also best able to work with your broker on the claims information (see item 2. above).

5)  Of Counsels.  When counting the number of attorneys the question is usually a general one – “How many Of Counsels are there at the firm?”  Even if the question is generically written, it behooves you to further explain this position in your firm.  Are they full time or a few hours a year?  Most insurance companies, if they are told about it, will discount if your Of Counsels are non-full time attorneys.  No need to pay full rate for a part timer

6) Application should be typed.  Sounds silly, but this matters.  Underwriters are human and interpret a hand written application as a firm that is not sufficiently technology savvy to run a modern law practice.

7)  The application must match your website.  If your website says you do something, you should proactively explain why your application says something else.  Many underwriters do look at your website and get uncomfortable if they don’t match what you wrote in the application.

Upgrading your application is the single best way to improve your professional liability options.  In today’s economic climate, the best run law firms are working with their broker to leave no application stone unturned.

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