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• What Is Lawyer Malpractice Insurance?
• What Does Lawyer Malpractice Insurance Cover in Illinois?
• What Doesn't Lawyer Malpractice Insurance Cover in Illinois?
• How Does Lawyer Malpractice Insurance Work?
• How Much Does Lawyer Malpractice Insurance Cost In Illinois?
• What Is Tail Coverage Lawyer Malpractice Insurance?
• How an Illinois Independent Insurance Agent Can Help You

According to the American Bar Association, the average lawyer can expect three legal malpractice claims during their career. That's why it's important for Illinois lawyers to protect themselves and their practices with the proper lawyer malpractice insurance.

This policy is not part of your standard business insurance package, which is why an Illinois independent insurance agent can help you understand what malpractice insurance is and why you need it. Here's a closer look at the benefits of lawyer malpractice insurance.

What Is Lawyer Malpractice Insurance?

Lawyer malpractice insurance, also known as professional liability insurance, is a type of business insurance designed to protect attorneys, lawyers, and similar legal professions from claims related to professional errors. 

While every law firm needs business insurance, your traditional policy will include general liability, property damage, personal injury protection, and business interruption insurance, but none of these will cover a claim directly related to how you practice law. Lawyer malpractice is insurance for the practice side of your firm.

5 most common areas of law where malpractice claims are made

What Does Lawyer Malpractice Insurance Cover in Illinois?

Malpractice is defined as "improper, illegal, or negligent professional activity or treatment." For a lawyer, malpractice typically refers to failing to represent a client to their expectations, failing to present the facts of a case in the client's best interest, offering poor legal advice, conflicts of interest, administrative errors, and missed deadlines. If you perform any of these types of malpractice, you could be sued by your client  Lawyer malpractice insurance is what would cover the legal fees associated with the lawsuit. In particular, it covers:

• Legal fees, expenses paid and costs incurred as a result of judgments, settlements, awards, restitutions, financial loss, and more
• Declaratory relief
• Criminal or civil fees, penalties, sanctions, and forfeitures
• Punitive damages

Your Illinois independent insurance agent can walk you through your malpractice policy and explain the exact coverages that you have.

What Doesn't Lawyer Malpractice Insurance Cover in Illinois?

Most lawyer malpractice insurance will not cover deliberate acts, as well as sanctions or attorney fees related to disciplinary defense. 

You might also find some exclusions in lawyer malpractice insurance if you are not practicing full-time. Part-time attorneys may experience additional exclusions in coverage that need to be covered by additional endorsements. 

Another thing to pay attention to with lawyer malpractice insurance is how the carrier defines legal services and professional services. Every policy is different and it can affect the scope of your coverage.

How Does Lawyer Malpractice Insurance Work?

Legal malpractice insurance provides coverage for one year at a time, meaning attorneys must repurchase this type of insurance every year. In addition, every lawyer's malpractice insurance policy is purchased as a claims-made product. This means that the policy will respond if the occurrence takes place after the retroactive date of the policy and the claim is made in the year that the policy is in place. 

The retroactive date is the specific date provided in your policy that a claim must have occurred after. For example, you may purchase a lawyer malpractice policy with coverage from 5/1/2021-5/1/2022, but the retroactive date on your policy might be 3/1/2018. This means that the occurrence must have happened after 3/1/2018 in order to be covered by your malpractice policy.

According to insurance expert Paul Martin, as you continue to purchase lawyer malpractice insurance, your retroactive date remains the same as the first time you purchased it, and it should extend back to when you began practicing as an attorney.

How Much Does Lawyer Malpractice Insurance Cost in Illinois?

Fortunately, lawyer malpractice insurance is not as costly as other types of professional liability coverage, such as medical malpractice insurance, but it can still be expensive.

On average, attorneys will spend between $1,200 to $2,500 on lawyer malpractice insurance. However, attorneys who practice higher risk cases or in high-risk areas could see that number jump between $3,000 and $10,000 a year. The highest risk areas of practice include:

• Transactions involving securities
• Intellectual-property cases
• Trusts and estates
• Plaintiff's personal injury cases
• Loan modifications
• Patent work

Most carriers will take your personal case risk into consideration when determining your policy. 

What Is Tail Coverage Lawyer Malpractice Insurance?

Malpractice coverage only lasts one year at a time and every policy has a retroactive date. This means that when you retire, you're no longer covered by your lawyer malpractice policy. So what happens if an old client decides to sue you for an occurrence that happened when you were their attorney? The fact is, you can still be held liable. Unless you've purchased tail coverage, you won't be covered by your malpractice insurance.

"Tail coverage is referred to as an extended reporting period or a tail," explained Martin. "You're attaching a tail on to the end of your last malpractice policy that might be for two, five, or ten years so that someone cannot come back and sue you for something that you did a long time ago."

How an Illinois Independent Insurance Agent Can Help You

Everyone makes mistakes. When you're representing a life-changing case for another person, you run the risk of an error or omission costing you the case and greatly upsetting your client. An Illinois independent insurance agent understands professional liability and why lawyers need special protection. They know that a great malpractice policy is about more than just the cost. It's also about the type of protection it provides and the claims it covers. They will sit down with you and go over your business and the types of cases you take on. They'll make sure that your insurance protects you from the day you start practicing until long after you've stopped.