Why an Accurate Application is Key to Keeping Premiums Low

business insurance planning cost cutting

Are you neglecting to review your law firm’s malpractice insurance policy on a regular basis? Reviewing your policy at least once a year ensures that your policy fits your current needs and you are getting the best product for the best rate. 

Your malpractice insurance application requires more time and effort than one might think-it will ask a wide range of questions including the firm’s size, claims experience, and the firm’s area of practice. These questions are important for the insurer to set the premium, which is why it’s s so important to answer these questions carefully and thoroughly. You do not want to end up paying too much in premiums or put your firm’s coverage at risk; this is why an accurate application is key to keeping premiums low.

Important Aspects of the Application for Determining and Lowering Premiums:

1) Area of Practice

One important aspect insurers take into consideration evaluating risk and setting premiums is the area of practice. This is based on two things: severity-how bad claims are- and frequency-how often claims are made in a specific area of practice. Some areas of practice have a higher frequency, such as family law and personal injury while environmental law and intellectual property law have higher severity. Knowing that this is one area that insurers use when evaluating risk can be helpful because you may want to look at whether or not it is worth it to continue a non-core area of practice that is deemed high risk. Not only will the high frequency or high severity aspect of a noncore practice affect the premium, but the fact that the firm is not an expert in that area can signal higher risk to the insurer. 

2) Number of Attorneys

Typically, applications will ask for the number of attorneys that the policy will cover as a tool in setting the premium. Some insurers differentiate between “of counsel,” retired or reduced schedule attorneys, contract attorneys, and full-time attorneys. Because the risk of covering a full-time attorney is different than the risk of covering a retired or reduced schedule attorney, if the application only asks for the number of attorneys, it could be beneficial to ask whether or not the insurer would like more specific information. Not only could this save you on premiums, but it will also confirm that you are receiving the most comprehensive coverage for your firm. If you do not distinguish between different levels of attorneys, you might consider it. Treating all attorneys as full-time employees may make your premiums higher than if you were to give a more accurate account of their roles on the application. 

3) “Good Behavior” Premium Reductions 

Another way to possibly cut premiums is to use risk management tools. Many insurers offer premium credits for firms that use risk management tools such as billing practices, docket control, and conflict resolution practices. Not only could administering new or additional risk management tools benefit your firm by reducing premiums, but it could also reduce your possibility of a malpractice claim. 

Ready to review your policy? Remember, an accurate application is key to keeping premiums low. Contact us now for a free and no-obligation review.