I’m starting a small business. What insurance do I need? 

When starting a small business, most of the time, money is pretty tight and price is a major consideration when deciding to buy anything. Usually, and unfortunately, insurance is pretty much always close to the bottom of the list. 

At a bare minimum, you do need to consider the purchase of any insurances that are mandated or required by the state that you’re in, and the industry that you’re practicing in. 

In my opinion, the most common required insurance in Pennsylvania is workers compensation. If you have employees, you need a workers compensation policy to cover them in the event that they are injured on the job. You should have this in place on the day you open up shop. 

Next, you should think about protecting yourself and the assets of your business. This can usually be accomplished with the purchase of a business owners package, which would include general liability coverage and coverage on the business personal property. 

General Liability protects you against negligence claims, and the business personal property actually protects the property of the business. Depending on the amount in your specific industry, these small business packages can be purchased starting at $500. 

Again, a lot goes into pricing and the pricing will vary. There are several other coverages that you need to consider and review, such as employee benefits, health insurance, professional liability insurance, cyber insurance, bonds, and crime policies, just to name a few.

But if you’re just starting out, you need to make sure you address the first three items that we talked about – workers compensation and a small business owners package which protects in general liability, and business personal property.

When underwriters look at a risk, there are several factors that come into play in the pricing portion of the process.

A couple of the major driving factors or driving forces are:

• How long have you actually carried insurance?
• How long have you actually been practicing law?
• What type of law do you practice?
• What areas do you play in?
• Have you ever had a legal malpractice claim?
• Do you really care about risk management?
• What kind of risk management techniques do you have in place in your office?

These are all things that an underwriter will look at that will either cause your premium to go up or cause your premium to go down.

Are you looking for ways to lower your legal malpractice insurance premiums and help turn prospects into firm clients?  Look no further than your firm’s website and online presence.  

Insurance carriers now review your firm’s website in an effort to try and get a better picture of you. They are looking at the site content describing your areas of practice, the type and size of your clients, risk management procedures, articles in the firm newsletter, blog, your Google My Business profile and social media feeds. 

They are trying to determine if your law firm’s site conforms with the ABA and or state bar association rules and guidelines on advertising and e-platforms.  What the underwriter sees and interprets from your site will impact on how he or she views the exposure your firm creates and will influence the pricing up or down.

One of the content items that seems to regularly raise a red flag is the listing of the firm’s practice areas on the site.  Firms will often boast several areas of practice on the site, some of which they haven’t had a case in that area for years. 

I realize that it may seem like a good idea to list as many areas as possible to try and draw in clients. I have even spoken to firms that have told me that they want the web site to project the firm as having that “large firm” appeal or sophistication impact. 

From an underwriting and pricing standpoint, know that it can have a negative impact.  Especially if several of the areas of practice are considered higher risk areas such as: Oil and Gas, Securities, Intellectual Property (copyright patent trademark), Class Action and some Employment law.

Additionally, from a marketing standpoint, listing areas of practice that you do not typically deal in can have negative effects on your search engine optimization as well.  Google wants to know what your firm does well and they want to show your website to people searching for that skill. 

When you list many areas of practice and don’t have a concentration on a particular niche, your website is less likely to show up in the organic search results for what you do best! 

Please know, I am not trying to tell you how to advertise or practice.  That obviously is up to you. I am telling you that you should be as accurate as you can with the content on your website, Google My Business listing and social media profiles. 

Know that people other than prospects are looking at your website including insurance carriers and even your competition.  Keep your online presence updated, relevant and interactive.

It will give the insurance carriers an accurate picture of your firm, coordinate and confirm the information you list on the malpractice application and help drive the type of prospects to your website the firm wants to have as new clients.

What is a loss only deductible?

A loss only deductible, which is also commonly referred to as first dollar defense, is a deductible type that will only apply in the event that there is a settlement of a claim.

This means that if you are sued, and there are defense costs and other types of incidental costs, they’re not going to apply to your deductible. Your deductible is only going to apply in the event that there is some type of loss, i.e. settlement.

Is there a minimum limit that you need to carry on your legal malpractice policy as an attorney in Pennsylvania?

There is no limit that is required. As a matter of fact, you don’t have to carry legal malpractice insurance at all. However, keep in mind, if you do not carry at least $100,000 per claim, and $300,000 aggregate limit, you do have to disclose that fact to your clients that you do not carry the minimum of 100/300. On a side note, 100/300 limits is really not sufficient either. 

It is recommended that if you are going to carry legal malpractice insurance, you need at least half a million dollars per claim. Don’t get caught uninsured or underinsured.

Contact us at INtegrity First Corporation and we will be glad to answer any questions regarding legal malpractice insurance.

How often should you shop your legal malpractice insurance? It doesn’t hurt to actually look at other coverages every year, but it doesn’t pay to actually switch every year. That’s a dangerous practice to change your legal malpractice policy carrier year after year after year. You do not want to do that because of the type of policy it is. It is a claims made policy and switching year after year after year is not a good practice.

Also, when you’re shopping legal malpractice insurance, in order to get a solid quote from a competing carrier, you need to complete that carrier’s application. So you have to ask yourself, if you’re looking to save $100 but they’re asking you to complete one of their applications, how long is it going to take you to complete that application? An hour, two hours, three hours? What do you charge an hour? $100 an hour, $200 an hour, $300 an hour?

It actually could end up where it’s costing you money to switch carriers to save premium dollars. Kind of a crazy thing!

We at Integrity First Corporation are celebrating our 14th year in business this month and we want to thank all of our clients who made it possible because without you, we wouldn’t have made it one year, let alone 14 years. So thank you very much.

With any anniversary, I think you start to reflect as to what has changed over the course of the years (other than the color of my hair). I actually had a client give me a call this past week. He asked me if I thought the legal malpractice industry was a lot more competitive than what it has been in the past because he’s been receiving several emails, phone calls, and faxes every day from people that he’s never heard of offering legal malpractice insurance. I told him no, as far as I was concerned, it was not more competitive. It’s actually, from a coverage standpoint, probably less competitive than what it has been in the years past because there are less carriers that are actually offering the coverage.

As I started thinking more and more, I thought the reason why it seems that it’s more competitive is because there are more agencies and more agents that have gotten appointments or assignments to be able to offer quotes and coverage terms and we as an industry have actually made the legal malpractice product more of a commodity at times than that of a professional product. Agencies now send out what’s referred to as indication sheets and emails that say “ If you answer these three or four questions, we’ll throw a price at you.” and that’s what it’s become. So, it does seem that it’s gotten more competitive because of that practice. And, from my perspective, I think that’s sad. 

As an agency, we pride ourselves in trying to establish a long and solid relationship with our clients, getting to know them, and making sure that they’re getting the coverage that they need. We keep up to date and up to speed with the changes in the policy and the changes in the industry. We’re not just going to throw out four questions at you and say, “Hey, answer these, here’s your quote, don’t really care what you do, not really sure if the policy is going to cover everything that you need. But we’re gonna give you a price that’s less than what you’re paying.” We’re not going to do that.

We’re going to continue to do what we have been doing the last 14 years, for the next 14 years. So, again, I want to thank all of you for giving us the opportunity to be of service to you, and we do look forward to another 14 years of being in business. Thank you very much.

Does your business include providing notary services for your clients?

If it does, you may have a potential coverage gap in your errors and omissions insurance policy.

In the times that we live in today with the COVID virus in the state mandated social distancing rules and regulations, the notary industry has come up with what they call RON services, remote online notary services. This basically allows the notary to perform notary reacts without the signer of the documents physically appearing in front of the notary. And while this may be a great thing to do now, during these times, it does pose insurance concerns and coverage issues.

Most errors and omissions policies which cover notary acts contain an exclusion or exclusionary wording that prohibits a notary act without the signer of the documents physically appearing in front of the notary.

Well, if you are notarizing a document online, obviously the signer of the document is not physically in front of you. What do you do?

I suggest that you call your insurance broker that sold you your errors and omissions policy and have him or her confirm with the insurance carrier, that the RON services will in fact be covered under your policy.

We at Integrity First Corporation have called all the carriers that we deal with for the errors and omissions coverage and they all have answered positively with regards to the remote online notary services. They have confirmed that the policies will respond to the RON services provided that those services have been done in accordance with the state approved guidelines and regulations.

So again, you need to do the same. Call your broker and confirm that coverage does exist for these types of services in your policy.