Those professionals whose job is to help their clients in legal cases can find themselves in troubles if when a lawsuit is filed against them. In today’s world, lawyers who impart skillful advice and services to people can be sued for negligence, errors and omissions on their part and the cost of which can hefty.
The one saving grace is that it is feasible to curtail the loss or damage if someone has already bought a lawyers’ indemnity insurance, and any loss or damage caused to the other party is not due to the willful neglect or deliberate act.
Broadly speaking, lawyers’ indemnity insurance indemnifies the policyholder against a myriad of financial losses which may result from a claim brought against them due to an error or omission committed while discharging the professional services. For instance, if someone’s lawyer fails to file a paper with the court within the deadline, resulting in the loss of the case, the lawyer would be liable for errors and omissions claims.
However, there is one condition which says that the loss incurred by the third-party must suffer bodily or property damage. It is essential to have a lawyers’ indemnity insurance policy as the policyholder may not be able to bear the loss if a claim is brought against him or company. Many times, big law firms purchase professional indemnity insurance policies for its lawyers as the part of contractual obligations and sometimes due to statutory mandates.
Who should buy lawyers’ indemnity insurance?
In addition to lawyers, the other parties which should purchase lawyers’ indemnity insurance policies are a notary, legal consultant and law firms across India and abroad.
How to decide the correct coverage under lawyers’ indemnity insurance?
There is no fixed limit of coverage under lawyer’s indemnity insurance, and it would depend only on the policyholder’s perception of risk along with the areas of operation. For deciding the correct coverage limit under lawyers’ indemnity insurance, the policyholder must carefully assess its risk profile, the possibility of the occurrence of the loss along with the maximum loss which he can bear without endangering his business. Further, the premium would also depend on the risk profile of the policyholder. Usually, the premium can vary anywhere between 0.2% and 2.5% of the indemnity limit, which would depend upon the type of coverage and the risks.
Read more: Five Types of Organisations Which Must Have Professional Indemnity Insurance
Whatever would be the case, it is essential to choose the sum insured that should be sufficient to cover any legal obligations which the policyholder may face at any point of time on the basis of the contract size, client spread and features of the client’s contract. The adequacy of the sum insured along with the extensions are the most important factors which should be kept in mind while choosing the cover.
What is not covered by Lawyers’ indemnity insurance?
While the purpose of the lawyers’ indemnity insurance is to offer financial coverage, there are some instances when the insurer will not offer coverage. The indemnity insurance will not cover those liabilities which arise due to criminal acts or acts committed in violation of law or ordinance, along with the services which are given under the influence of drugs or alcohol.
Similarly, fines and exemplary damages are not covered under the policy, nor the third-party liability or losses arising out of the war and nuclear perils. Likewise, the insurer can reject claims which are related to breach of confidentiality. In fact, each insurer has its list of exclusion when it comes to lawyers’ indemnity insurance, which must be carefully read while buying any cover.
Read more: Should You Buy a Professional Indemnity Insurance
Conclusion
No one wants to hurt their clients financially, however, seldom, errors happen unintentionally. Therefore, it is indispensable to purchase lawyers’ indemnity insurance policy. You can take the help of SecureNow, a leading corporate insurance advisor, to find and buy the right insurance policy.
As a lawyer, you work towards protecting the interests of your clients, and let lawyers’ indemnity insurance safeguard you!
Lawyers Indemnity Insurance
