Sarasota Insurance Agency >> blog
A lawyer in our coaching community, Lab, walked into her office one morning, only to find a pipe burst over the weekend and flooded the office. Everything was ruined. She had to relocate their entire office for months so that everything down to the drywall could be replaced. Luckily, she had a paperless office and a great commercial property insurance that covered the financial burden of the move and repairs. Many attorneys we know would’ve been sunk.
Insurance isn’t “just a nice thing to have.” It’s a critical part of protecting your firm, your assets, your equipment and your personal life. More specifically, law firm insurance:
These benefits are just the beginning. Each insurance policy offers even more benefits that outweigh the cost of the premium.
The bottom line is this: you can’t predict the future. With insurance, you’ll be prepared for whatever comes your way.
You may view some insurance coverages as unnecessary or luxuries you simply don’t have the cash for. Yet, malpractice insurance—a given as an attorney—just isn’t enough. You have to spend money now to save money in the future. And those savings could save your bottom line.
Ceiling repair after a leak? $700.
Drying out your commercial property after a water leak? $2,700.
Replacing your computer and other tech equipment? Thousands of dollars.
Commercial property insurance? Priceless.
Maybe you’re sold on the idea of acquiring insurance for your firm. So how do you choose the right insurance to fit your needs? There are literally thousands of insurance companies and policies out there, not to mention many types of insurance to choose from.
By gaining a basic understanding of the insurance available to you, you’ll be able to choose a plan that properly protects your firm. As law firm business owners with some experience under our belts, we know a thing or two about business insurance.
Before you do anything, we recommend finding an insurance agent who has experience working witj businesses. They’ll help you decide which policies you need, how much coverage is best for your firm, and beyond.
Most of the time, your broker will lay out your options in a proposal, which may include a wide range of insurance types. Let’s discuss what you might find inside your proposal.
Most attorneys and law firms carry a basic business owner’s policy or BOP. Think about your homeowner’s policy. It’s meant to protect your home and its contents, right? Your BOP does the same with your business.
A BOP generally includes:
With a BOP:
You’ll have protection from lawsuits, accident liability, loss of income due to property damage, and beyond.
Without a BOP:
You’ll be responsible to pay for legal fees associated with lawsuits, will need to pay out-of-pocket for property damage, and will need to eat any lost income resulting from it.
A BOP is absolutely critical for running your law firm. This isn’t something you can just ignore. Instead, it’s the basic policy every business owner should have from the outset of any business venture.
What happens if your BOP is inadequate in covering a particular claim? That’s where commercial umbrella insurance comes in. It’s designed to protect you from significant allegations and lawsuits that exceed your underlying policy’s coverage limits.
With Umbrella Insurance:
You’ll have protection from lawsuits or allegations that exceed what your current BOP plan covers.
Without Umbrella Insurance:
You may face a lawsuit that isn’t covered under your BOP, possibly causing financial ruin within your law firm.
For law firms, a commercial umbrella insurance policy is a great thing to have. After all, you’re in a service business where you work with the public on a daily basis. You have significant risk, making extra liability coverage a no-brainer.
If you’re a client-centric and forward-facing law firm, you’ve probably already started going paperless. Computer and media coverage offers protection for your technology infrastructure. It covers the loss of data and software, physical damage to your hardware, coverage for portable equipment (laptop, tablet, phone, etc.) and damages caused by viruses and malware.
With Computers & Media Insurance:
You’ll be able to replace or repair damaged hardware as well as receive any income lost after on account of data loss.
Without Computers & Media Insurance:
You may need to pay the out-of-pocket costs for hardware repairs, virus and malware repair, etc.
Computer and media insurance is a must-have for attorneys. You work with computers and software on a daily basis. Your cases often rely on the data stored within your computer and elsewhere. Although some property damage is covered under your BOP, these policies add more to further protect you from severe damages and data loss.
Some data loss can have a direct impact on your bottom line, such as the loss of your accounts receivable records. Accounts receivable insurance protects you from this loss while providing you with extra coverage for interest accrued on a loan you needed to offset uncollected cash.
With Accounts Receivable Insurance:
You’re protected from accounts receivable data loss which protects the funds you need for your critical business operations.
Without Accounts Receivable Insurance:
You run the risk of not being able to ask for payment from clients due to record loss. Plus, you’ll be responsible to pay for interest charges, extra bookkeeping hours, and other accrued costs due to loss, out-of-pocket.
Accounts receivable insurance isn’t necessarily a must-have, but it is a nice back-up plan. Some insurers may cover your accounts receivable in other policies such as your commercial property policy.
If you’ve yet to fully convert to a paperless law firm, you may have a slew of important documents and records hidden in boxes around your office. Should a disaster happen that results in the loss of those records, how would you restore them? That’s where this insurance comes in.
With Valuable Papers & Records Insurance:
You’ll gain protection for your valuable documents and records, helping you offset the expensive cost and time it takes to replace them.
Without Valuable Papers & Records Insurance:
You lose your valuable records and must fit the bill for replacement on your own.
An additional valuable papers and records insurance policy isn’t necessary for law firms who have gone digital (if you can’t tell, we recommend it). Yet, if you’re still using paper, it’s a good idea. After all, most commercial property policies exclude the replacement of valuable papers and records.
Your personal auto insurance policy won’t cover your business driving. Unfortunately, an accident on your way to a deposition may cause you some coverage issues. Business auto insurance protects you from extra liability while traveling for work.
With Business Auto Insurance:
You’ll be covered should you have an accident while traveling for business.
Without Business Auto Insurance:
You may be responsible for overwhelming out-of-pocket costs for medical care, property damage, and more.
Business auto insurance, or commercial auto insurance, is another no-brainer and is critical for your business as an attorney. You travel almost daily for business matters. Often, business auto insurance is included in your BOP.
Speaking of employees, did you know that their personal insurance policy may not cover an accident they have on the way to the post office while on the clock? For added protection for your employees who use their personal vehicles for business matters, you need a non-owned auto policy.
With Non-Owned Auto Coverage:
Protect your employees from accidents while performing business duties in their personal vehicles.
Without Non-Owned Auto Coverage:
Your employees may be held liable for their injuries, the injuries of others, and any property damage.
If you’re a solo attorney or an attorney working with contractors, there’s no need for non-owned auto insurance. Yet, if you have employees who travel for work often, this is a must-have for added protection.
If you negligently start a fire in your trash can after igniting a picture of the hairless cat at the center of your client’s heated animal-custody dispute, you’ll look to your tenant’s legal liability insurance for coverage. These policies cover you during events occurring inside a rented space that would otherwise be excluded under your commercial property coverage.
With Tenant’s Legal Liability Insurance:
Gain protection from damages that occur during an event inside your rented space.
Without Tenant’s Legal Liability Insurance:
You’ll be responsible for paying for damages resulting from an incident, with or without the hairless cat.
If you rent office space, you need this insurance. If you don’t, it’s not necessary. For damages that occur beyond the walls of your leased space, your general liability policy will cover you.
Data breaches are becoming more common as technology continues to evolve. As an attorney, you take in loads of data each year. Should you fall victim to a data breach, you’ll need help recovering the data and paying for data loss assistance. A data breach policy can help.
With Data Breach Coverage:
You’ll have the coverage needed to recover your data, reducing money lost from being unable to perform your duties.
Without Data Breach Coverage:
You’ll be responsible for paying for data recovery and data loss assistance, which may increase the number of days you’re out of commission. And when you can’t work, you can’t earn.
You’ve heard us talk about paperless law offices a few times now because we truly believe it’s the way to go. And if you’re heeding that advice, you need data breach coverage, plain and simple. Data breaches typically cost companies anywhere from $1.25 million to $8.19 million. A little money spent now could save your law firm in the future.
We have every reason to believe that your employees will be awesome. Yet, if they turn out to be dishonest, there’s coverage for that. For example, if an employee commits fraud or embezzlement, employee dishonesty coverage can protect you from financial loss.
With Employee Dishonesty Insurance:
Theft of property or money due to employee dishonesty won’t have anything on you.
Without Employee Dishonesty Insurance:
You’ll need to recover any money or property lost due to employee dishonesty.
If you’re a solo attorney, you can probably skip this coverage for now. Yet, if you have employees, this is a great addition to your portfolio.
This insurance doesn’t get a lot of air play, but comes in handy to prevent losses that occur from errors in the administration of your firm’s health insurance. For example: say you hire a new paralegal, offer them insurance, and then forget to actually add them to your policy. The paralegal seeks treatment and finds they aren’t covered. This insurance pay for the paralegal’s medical bills.
With EBL Insurance:
You’ll have protection from errors or omissions in the administration of your employee benefits program.
Without EBL Insurance:
You’ll be responsible for paying any costs associated with your error, which could put a hefty dent in your finances.
If you have employees and offer any employee benefits, you could consider this policy. If you’re currently a solo attorney without a team, you can skip this coverage for now. As you grow, you’ll need to consider this policy for added protection.
Did your pulse just jump to hyperspeed? Even though it’s a source of anxiety, health insurance is something everyone needs, regardless of profession. It’s the only way to protect yourself from the expense of medical bills resulting from routine care, emergency care, and everything in between.
With Health Insurance:
You’re protected from emergency cases such as surgeries that could cost you thousands upon thousands of dollars in care. You’re also eligible for routine physicals and care for you and your family.
Without Health Insurance:
Every type of medical care you require will require payment from you. Unfortunately, this can quickly drain your resources. One serious accident could mean the end of your financial wellbeing and perhaps even your firm.
Health insurance is an absolute must-have, no questions asked. If you have employees, it’s also important to offer them a benefit plan that includes health insurance, if you’re able.
Did you know that disability claims are some of the most common claims in the entire insurance industry? Disability insurance covers you should you suffer an accident or event that leaves you unable to work.
With Disability Insurance:
Should you become disabled, you’ll have the ability to have a steady income, regardless of your ability to work.
Without Disability Insurance:
If you become disabled, you may not have the funds to cover both your business and personal expenses. You may lose your income entirely.
Disability insurance is critical. If you rely on what you make through your business activities as your means to live, you must be prepared should that income go away. It’s also important to offer disability insurance to your employees, if applicable.
Workers’ compensation is an insurance plan that protects your firm from financial loss should an employee get hurt while at work or sick from a work-related cause.
With Workers’ Comp:
You and your firm will have protection from the expensive damages accrued after an employee accident or illness occurs due to work-related causes.
Without Workers’ Comp:
You’ll be responsible for paying for damages due to an employee’s injury or illness. You may also be subjected to employee lawsuits or fines due to not possessing proper workers’ comp coverage as a business.
If you don’t have a workers’ comp policy, call your agent now. Workers’ comp isn’t only critical, it’s mandatory in most business situations. If you’re a solo firm owner without employees, you’re technically exempt. Yet, it’s still important to have a workers’ comp plan for yourself.
If you unexpectedly have to close your firm, what happens to your employees? With an unemployment insurance policy, they’ll receive a partial replacement of their earnings, allowing them to get back on their feet.
Unemployment insurance is mandatory for all businesses. It’s an employer-funded program required by both state and federal law, and it’s pretty hands-off. You’ll pay taxes towards your state’s unemployment fund, which pays benefits for eligible workers.
After examining this list, it’s easy to think about how the cost of insurance will impact your bottom line. Just remember that spending some money on insurance now may just save your firm in the future.
Although law firm insurance costs vary per plan and carrier, we guarantee that there’s no comparison between your monthly premium and the costs associated with being caught without a plan at all.
Thankfully, you don’t have to manage the insurance maze alone. There are insurance agents out there who are ready to answer your questions and provide you with a portfolio that fits your specific needs. All you have to do now is call.
Written by Written by Lawyerist .com