Business insurance packages for law firms are the least examined policies at law firms. Since Superstorm Sandy, we have seen a small change in this, but over the years, this is an area of exposure that is significantly under-analyzed for law firms. Lots of reasons for this – claims are less common than professional liability insurance and health insurance, and the annual premiums are much lower (irrelevant but it’s human behavior).
These are the three most common and correctable errors when our Law Firm Team onboards new firms:
1) Employee Benefit Liability Insurance – Today’s employee benefit (health, life, disability, 401k, etc.) environment is complex and with the new regulations going into effect in the coming years, will become more complex and prone to errors. The Employee Benefit Liability is coverage endorsed on to your office package (aka General Liability) that covers your liability for mistakes in the administration of your benefit plans. Imagine the risk if you forget to add an employee or their dependents to a health or life insurance program, just before they get sick or die. Insurance companies have become very strict in their timeframe for changes. The cost for the insurance is very inexpensive (a few hundred dollars for most firms) for $1 million in coverage.
2) Hired / non owned auto endorsement – This endorsement is added to your office package policy too. It is coverage for the firm when partners and employees, while on firm business, are either driving a personal auto or using a taxi (i.e. all autos non-owned). This coverage is inexpensive and should be added especially when there is a large amount of driving / traveling on firm business. You can also add a separate policy that includes coverage for physical damage to car rentals.
3) Employment Practices Liability Insurance – Employment practices liability claims and circumstances are the most frequent legal claims against law firms today. The insurance policy for these claims, called Employment Practices Liability Insurance, is cheap compared to dealing with even one potential employer-employee situation and with the right law firm industry customization can protect these headline grabbing cases from turning into your worst nightmare.
While there is more you can do to correct your property and casualty insurance with your insurance broker’s full review, prioritize these three immediately. It won’t take long and it won’t take a lot of money. Need more? Email me for our more detailed checklists @ uri.gutfreund@singernelson.com.
