Property & Casualty mistakes must be fixed!

4 Property and Casualty mistakes that 90% of all law firms make and how to fix them.

In our reviews of property and casualty of law firms, we uncover all kinds of errors:  some large, some small.  The following items are the most frequent mistakes and how to fix them.

1.  Employee Benefit Liability – This coverage should be included in your office package policy.  It is basically an error and omission policy that covers the firm for mistakes in how you manage your employee benefit programs (401k, health, life, etc.).   For example, there might be certain coverage penalties if a new employee is not added to the health insurance in a timely fashion.  The cost is very inexpensive 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 employees of the firm while on firm business are either driving a personal auto or taxi (i.e. all autos non-owned but used by the firm).  This coverage is inexpensive and should be added especially when there is a large amount of driving on firm business.   You can also add a separate policy that includes coverage for physical damage to car rentals.

3. Valuable Papers Coverage.  The minimum amount of coverage that is automatic in most policies is not sufficient for a law firm in most cases.  This coverage is reimbursement for the firm to recreate your needed active client file.  Following a covered event like a fire, there is a huge expense to quickly recreate all of the relevant paperwork like expert reports, transcripts, papers from related litigations, etc.  Clients will not pay to recreate these items (they paid the first time) so it is important that insurance be in place to avoid this exposure.  The cost for this coverage is usually $1,000 per million in coverage.  If your firm scans ALL incoming file items, minimal coverage might be adequate.

4. Contents Coverage.  While this is the most basic part of the package policy, it remains a frequent source of errors in law firms’ insurance programs.  It is critical to do an annual check up of the value of your contents so that the insurance can make you whole when you most need it.  The most prone error in this category is coverage for the improvements and betterments of your space.  Improvements and betterments are the internal walls and any other built out space that you have.  Regardless, if you paid for the build out or the landlord did when installed, most leases hold you responsible to rebuild it, should they be destroyed.

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