The One Big Thing – Why shop and how to do it right

Over the next few weeks, we will be posting a series of strategies to help law firms improve their professional liability insurance policies.  These ideas improve the terms offered and lower the premiums.  We’ll cover the small stuff and the big stuff.  Today, we’ll address the big one – shopping your professional liability insurance.

There are many insurance companies that are interested in insuring law firms: 8 major players, 4 minor players, and 5 very minor players.  Shopping your insurance policies can have a huge impact on your policy premium and the ongoing financial impact on your firm (ongoing deductibles, limits, etc.).  In our next post, we’ll detail the timeline and benchmarks for effectively shopping.

Why shop and how to do it?

Each year, you must approach all of the insurance companies and negotiate with all of them.  Many times we see law firms not shopping to the entire market.  The law firm’s broker goes to three or four of the insurance companies to “get a feel of the market”.  This thinking is wrong as in any given year, some companies will become aggressive for your business and some companies will now consider your practice areas as too risky for their most updated underwriting appetite.

What results can you expect?  The rate and terms differential in the marketplace is very diverse.  For the same limits and deductibles, pricing varies in excess of 100%.  A law firm can decide to pay $100,000 or $200,000 for the same coverage.  All things being equal, there is no reason to overpay to insurance companies.

When the first shopping round is completed, your broker should do a complete analysis of the choices comparing the premiums and terms offered.  With this analysis, your broker should negotiate with all of the competitive companies to get the best terms from the best companies.  The terms analysis needs to consider the companies: experience in lawyer’s professional liability insurance, financial strength, and reputation of the insurance company.

Top common misconception of why not to shop.

Waste of time – Not true.  True it takes significant time to shop, but most of the time should be your broker’s time.  That’ what they get paid for.  Insist on it or get a new broker.

Terms are the same anyway – Not true.  Differential could be huge between the options

Do you really gain leverage?  Absolutely.  Insurance companies will frequently drop their original premiums by up to 25% or match beneficial terms to keep accounts they know are profitable.

Do you agree or disagree?  Email the Law Firm Insurance Guru at

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