General Practice, Solo & Small Firm DivisionSolo NewsletterSolo, Vol. 5, No 3.
Spring 1998 © American Bar Association. All rights reserved.
Insurance: So Many Choices, What to Buy?
BY EDWARD POLL
Edward Poll is a lawyer in Venice, California.
The purpose of insurance is to protect against specific catastrophes, not to make a profit. But balancing the need for insurance coverage and the cost of the coverage is not easy. You might feel foolish spending money on something so intangible, but when disaster occurs and you have the proper insurance coverage, you will be seen as wise. Review your own circumstances. Buy no more than you think you will need.
Life: The primary goal is to provide business associates with enough protection (money) to allow them to make the transition from the deceased's contributions to hiring and training a replacement or to pay the taxes on the estate of a loved one.
Disability: Provides a flow of revenue while you are either temporarily or permanently disabled and unable to take care of yourself, usually limited to no more than half of current earnings. May not be available to new solos because of the inability to show a continuous stream of income.
Health: Most sole practitioners do not offer this benefit as part of the employment package, though it may be competitively necessary. If you are unable to find a policy that is reasonably priced and that offers the benefits you desire check with your local bar association or the American Bar Association. Also, check with one of your clients to determine if there is a way to be covered under their policy.
Property & general liability: Usually the first policy purchased. Some of the coverages available under this broad category include:
- Business auto: Non-owned and hired auto protection. Separate policies are written for business auto and carries different coverage than personal auto insurance coverage.
- Fidelity & employee sabotage: Where someone else handles the funds of your law practice, this may be an important coverage. The expense is nominal . . . especially when compared to the protection offered.
- Business interruption: When your business is interrupted by a natural disaster, this insurance will come to the rescue and will pay an amount equal to the net profit and keep you "alive."
- Workers' compensation: This policy is generally mandated by the state. Employee accidents that occur at the place of business are covered by this policy rather than a traditional personal injury/liability policy. The premium is set by law with a minimum amount required.
Errors & omissions: Protection against malpractice is becoming increasingly important. Check with your jurisdiction to determine whether this insurance is mandatory. Where the insurance is mandatory, though, the risk will be spread out among all the attorneys in the state. This means that even if claims do exist, coverage cannot be denied.
Employment practices liability: This includes wrongful termination and sexual harassment claims. It's relatively new and may be the least known insurance "steal" today. Except for intentional acts, this insurance will provide significant protection for employment related practices.
Personal auto: If the car is used during and for the course of business, you are exposed to the risk of having a claim made against both you as an individual and your law practice. Both should be protected by having both you and your law firm listed as insureds under the policy.
Spring 1998 Table of Contents
General Practice, Solo, and Small Firm Section home page
ABA Network home page