Legal malpractice insurance is generally calculated using a formula that is modified by each insurance company. All insurance companies providing this coverage use some sort of variation of this formula built into a rating software program or simply applied and modified by an underwriter. One might guess at this formula using the only source of data the firm provides to the insurance broker and carriers-the application. Once completed by a firm the application provides the data needed to produce a rough quote.
Items from the application that determine the cost of legal malpractice insurance:
- Number of attorneys and their experience level. Obviously the number of attorneys is the primary developer of premium. The remaining items are factors that modify this initial premium.
- State/County/City-the location of your practice, satellite offices and clients. Some areas are more litigious and offer less favorable history of jury treatment of attorney defendants.
- Areas of Practice. Some areas are historically higher risk to legal malpractice claims. See our post here regarding risky areas of practice.
- Prior acts coverage. The number of years of prior work that will be covered during this year.
- Claims and disciplinary history. The recent history of each attorney may significantly affect the premium.
- Limits. Higher limits gradually increase the premium.
- Deductible. Higher deductibles offer incrementally decreasing premiums.
As one might guess considering all of the factors above it is nearly impossible to guess at a premium for a given law firm without knowing much of the data listed. Please let us know if you have questions regarding legal malpractice insurance rates.