Important Insights into Texas Law Firm Insurance

Important Insights into Texas Law Firm Insurance

September 27, 2018

Texas Law Firm Insurance

What keeps you awake at night? If you're an attorney, senior executive or owner of a legal firm, the threat of a malpractice suit or the loss of confidential client data probably ranks pretty high.

You don’t need us to tell you that we live in a litigious age. Or that the cost of defending and settling lawsuits is on the rise.

So, knowing the you're properly protected against these and other risks are critical to your peace of mind.

How long has it been since you reviewed your current law firm insurance policies? Or, if you're newly set up, how much time have you been able to devote to investigating the coverages you need?

Unless you can answer either of those questions positively, here's some useful food for thought about securing the right -- and the most appropriate -- coverage for your firm.

What Types of Legal Practice Insurance Do I Need?

Without a doubt, the most essential insurance protection a law firm needs is professional liability insurance often referred to as malpractice insurance. This coverage includes protection against what is commonly referred to as errors and omissions risks as well as certain legal activities such as notarizing and trusteeship.

On average, most lawyers can expect to face a malpractice claim once or even twice during their practice.

However, professional liability coverage is not mandatory in Texas -- yet the cost of defending and potentially losing a malpractice lawsuit could be sufficient to put even a financially sound legal firm out of business. (About one in five malpractice suits results in a payment or settlement.) *Not all professionally liability policies are the same.

It's important to distinguish professional liability from equally-important general liability coverage, which protects against bodily injury and damage allegedly suffered on your office premises or as a result of your business activities.

Third, you should have coverage against the key perils that can threaten. your commercial property and contents, such as fire, theft and vandalism

It's worth noting that smaller firms can often combine general liability, property and income protection insurance into a single Business Owners Policy or BOP.


Another increasingly critical type of coverage for your law firm is cyber insurance or cyber liability insurance, to protect against data breaches. An estimated 15% of law firms suffer this type of data loss every year, which means that on average you can expect data loss every six or seven years.

Your systems may be secure but the loss of a mobile device or laptop can also lead to data theft. Because of the confidentiality of client files you store, the theft of personal data from your system could be catastrophic.

More Coverage Options

In addition to these types of legal firm insurance, you might want to consider:

  • Workers compensation insurance -- not a legal requirement in Texas but highly valuable all the same. It protects your employees in the score of employment.
  • Commercial auto insurance and/or coverage for vehicles you or your employees own but also use for business. This will cover firm vehichcils as well as employees veciales during their scope of employee.
  • Fidelity bonds.
  • Advertising liability coverage.
  • Business interruption insurance.
  • Life insurance for key personnel.
  • Umbrella insurance, which raises the limits of your coverage, kicking in when your standard liability coverage is exhausted.

How Much Does Texas Law Firm Insurance Cost?

Many factors affect the premiums for Texas law firm insurance. These include:

  • Number of attorneys.
  • Liability limits and deductibles
  • The individual attorneys years of experience. Longstanding lawyers are actually more prone to malpractice claims than newcomers because policies usually include "tail" coverage extending back across the individuals' legal career.
  • Coverage for prior acts is crucial. A prior acts date will likely be reset if there's a gap in coverage,
  • Prior claims history.
  • Areas of practice. Certain sectors of the legal framework are more subject to (and sometimes more costly) claims.
  • Number of years an attorney has had continuous coverage.
  • The insurance carrier. Each firm has its own actuarial and underwriting rules and priorities. There are fewer carriers for this type of coverage in Texas than in many other states.
  • The size of any deductibles.
  • Given all of these factors, it can be difficult to pin down policy premiums. However, a new attorney might be able to insure against malpractice for less than $2,000 for the first year, but their rates will increase each year between year two through five.
  • Policies are written on a claims made basis. This means that the policy is covering not only claims from this year, but also previous years.

Where Can I Get the Best Law Practice Insurance for my Needs?

Law firm insurance in Texas is an increasingly complex collection of coverages that needs to take account of the size and nature of your business -- especially any areas of practice you provide -- and both Federal and state regulatory and client disclosure requirements.

This calls for a level of insurance knowledge that law firms themselves are unlikely to have and few agents may be qualified to offer. For example, knowing how best to lodge a claim and the speed with which this is done can be critical to resolving a malpractice allegation through the process of "claim repair".

An agent that understands your specific needs and the legal industry itself, like Pasadena Insurance Agency, can save you time, money and hassle -- especially if or when you need to make a claim.

That applies whether you're a new practice seeking coverage for the first time or an established law firm reviewing your annual coverage. By working with multiple, A-rated law firm insurance carriers, an independent agent should be able to customize your coverage and secure the most competitive rates available.

A good agent should also be able to provide you with solid risk management guidance.

Is it time to review your Texas law firm insurance coverage or, as a new practice, to find answers to your insurance questions?

If so, contact one of our experienced law firm insurance agents at: 713-869-6991; we will take the load off your back and make securing coverage an easy and cost-effective process.