Solo Practitioner? What You Need to Know About Professional Liability Insurance

You’ve decided to begin your own private practice and are hesitant about the steps that are needed to be taken. Without the proper education or means to operate a successful business, it can be a daunting task.

One key component of running prosperous business is professional liability insurance. More often than not, you will find more solo practitioners do not carry professional liability insurance. Those who do not have a policy enforce will understand the average amount of money spent on one claim will be significantly higher than the annual cost of professional liability insurance.

Now you’ve finally decided to establish your own private practice, now it’s time to have a better grasp of professional liability insurance. The following information are essential topics in which will help you obtain the best professional liability policy for your firm.

  • No Insurance? You May Have to Disclose That

As professional liability insurance is still widely optional, Help Abolish Legal Tyranny (HALT) and groups alike have accomplished disclosure laws in 26 states. States that have disclosure laws are requiring attorneys to reveal to their clients that they do not have professional liability insurance. Also in certain states, clients are required to sign a written disclosure statement that expresses the attorney that is representing him or her does not have any form of professional liability insurance. With more laws alike coming forward, it is fair to say states will introduce a law that will make insurance mandatory.

  • Limits of Liability, Inside or Outside?

The inevitable has happened, you’ve been sued. Now you need to hire an attorney to defend yourself. Who is going to pay for the attorney and the other legal fees that come along? What to consider when shopping coverages is to have coverage “inside” or “outside” the limit. This will determine if those fees are covered. If you chose a policy with coverage “inside the limit”, this means your policy will pay all of your defense costs that are within the policy’s first limit, but also deducts from your overall maximum preset limit. If you chose a policy with coverage “outside the limit”, this means your policy will pay for all of your defense costs even if it exceeds the policy limits itself. With the rest of the policy being equal, having limits “outside” are more beneficial to the policyholder.

  • Continuous Coverage = Higher Premiums

Professional Liability insurance is the opposite of everyday car insurance. While car insurance will lower your premium for having a perfect or nearly perfect driving record over the years, professional liability will not. With continuous coverage, your premium will continue to grow higher each year.


  • It’s All About The Past

One major difference between car insurance and professional liability insurance is it will cover future accidents that may occur during that policy period. Whereas professional liability insurance will act only if a policy has been enforce at the time of the incident, will cover legal claims that have happen prior to or during the policy period, also known as “prior acts”. If you maintain uninterrupted professional liability insurance, even if you decide to go with another company, you will have coverage from the very first policy period to the expiration date of the current policy. Due to coverage dating from the inception date of the policy to the current policy, gives another reason why solo practitioners should carry insurance. Firm who have decided not to purchase professional liability insurance, but decided to purchase insurance at another time, could find themselves in a predicament. As they will not be covered for any claim or incidents while they were uninsured.


  • Review Your Policy Before You Sign

One of the biggest rules attorneys always follow is to read everything before signing any documentation. The same rule applies to professional liability insurance. Because each company is different, coverage will not be the same. Understanding your policy and what you are covered for will help you decide what the best coverage is for you.

To have a successful private practice, you will take many measures to stay within your budget. Although not having a professional liability premium can be appealing, it would be an unjustifiable decision. As professional liability insurance is much more affordable than having to pay for a claim or incident due to the lack of insurance.