Am I Covered for That?

I am not a fan of insurance companies, but I do appreciate the ad campaign run by Farmers Insurance featuring the phrase, “you may think you are covered for this, when you are really covered for this.”  The point being, you should check your insurance coverage.  I stress this with all my clients, especially the ones with state minimum insurance limits.  But as lawyers, there is no excuse if we don’t have the proper coverage.

But my friend John Fisher from New York, in a blog post entitled, “A Lawyer’s Worst Nightmare,” takes this one step further.  He lists six coverage every lawyer should have.  To be truthful, I learned something and went out and purchased additional coverage.  I won’t tell you which one I was missing!  In no particular order, every lawyer should have the following coverages;

1.    Cyber Liability Insurance

Let’s face it, out offices rely on technology and the internet.  While it is unlikely your business will be targeted, you could be the victim of cyber attack or data breach.  Additionally, if you were to lose your laptop or your cell phone, you could also be vulnerable.  Cyber liability insurance can provide a level of protection in these cases.  It can pay for defense costs, damages as well as the cost of notification of clients in the event their personal information is compromised.  This type of coverage may covered in Office Business Insurance, so you should check before purchasing stand alone coverage.

2.    Hired & Non Owned Vehicle Coverage
Did you know if your paralegal runs out to interview a new client, or your secretary runs out to pick you up lunch, and they got in an accident, they likely would be considered your agent and therefore, you can be held responsible?  Their personal car insurance would be primary, but do you have insurance which would cover you and the firm in the event they were in a serious accident and did not have sufficient coverage?  This is where hired and non owned vehicle coverage comes in.  Once again, this may be included in Office Business Insurance, so double check.

3.    Employee Theft/Crime Coverage
Whether you trust your staff completely, or keep a watchful eye on them, theft can happen.  Just ask a suburban law firm who lost $550,000 from a legal secretary who embezzled funds for years.  Not only firm funds are in jeopardy, client money could also be at risk.  The ISBA wrote a good article on employee theft, but you should ensure you have this insurance coverage for your practice.

4.    Employment Practices Liability Insurance
If you were sued, rightfully or wrongfully, for discrimination (age, sex, race, religion, etc.), would you be covered?  If not, you would have to hire your own lawyer to defend you and of course, pay any settlement or verdict.  Employment practices liability insurance (EPLI) covers you for this and more.  It also covers things such as wrongful termination, defamation and harassment.  No matter how well you think you treat your staff, an employment claim may be brought against you.

5.    Umbrella/Excess Coverage
As the name implies, this provides coverage which kicks in after you have exhausted other coverage.  It comes into play in only the most serious claims, but without it, you and your firm’s assets may be at risk.  You should have umbrella coverage equally one year’s revenue for the firm.

6.    General Liability Insurance
Whereas malpractice insurance covers you for a mistake in professional judgment, it does not cover you for general liability.  Suppose a client trips and falls over some files in your office?  Perhaps someone slips and falls in your bathroom which your secretary just cleaned and did not warn the floor was wet?  Your classic personal injury cases.  General liability insurance pays for these claims.

7.    Workers’ Compensation Insurance
Many people, even some lawyers, fail to realize that workers’ compensation insurance is mandatory.  You may think your employees are not at risk of getting hurt in your office, but you’d be wrong.  After handling workers’ compensation cases for many years, I can assure you that just because someone works in an office environment does not eliminate the risk of injury.  Perhaps you’ll have a secretary who develops carpal tunnel, or a staff member who suffers a shoulder or knee injury while moving files or knocks themselves out hitting their head on a file cabinet drawer, you get the point.  Be sure to purchase workers’ compensation insurance; it’s the law.

Insurance is designed to cover you IF something happens.  Of course you can gamble that such things would, “never happen to me or my firm.”  But you would do so at your own peril.  Talk to your insurance agent and make sure you are covered, you may thank me one day.

Let us know what you think of this article or to suggest topics in the future. Michael McCready