As more states require attorneys to carry malpractice insurance, Hoosier attorneys’ views on the subject remain unchanged: Professional liability insurance should not be required to practice law, according to many Indiana lawyers.
Oregon and Idaho are now the only states that mandate attorneys to have legal malpractice insurance. Washington state, which has recommended that failure to comply with acquiring coverage result in attorney suspension, and California, which has proposed similar revisions to its licensing standards, are both actively considering the problem. California is also considering requiring attorneys to disclose whether or not they are insured.
Attorneys in Indiana are not required to undertake either of these things, so professional liability insurance is an option. The state, on the other hand, requires limited liability firms and partnerships to carry malpractice insurance.
Those in favor of mandated malpractice insurance claim that the public’s safety is at stake, and that lawyers who do not carry coverage may leave clients unable to seek redress if malpractice occurs. Those who have been taken advantage of by dishonest lawyers have limited recourse against lawyers who do not exercise customary care.
Opponents, on the other hand, claim that there isn’t enough evidence to show the problem is serious enough to require government intervention. Opponents are particularly concerned about entrusting the reins to insurance markets, which they believe will be costly to attorneys in more ways than one.
Although Indianapolis malpractice attorney Jon Pactor believes that all attorneys should have professional liability insurance, he does not believe that it should be mandatory.
“I don’t like the idea of the insurance sector deciding who can practice law based on their ability to obtain insurance,” Pactor remarked. “If a lawyer must have insurance to keep his or her license, the insurance sector effectively becomes a quasi-licensing industry.”
If lawyers are required to have insurance, he believes it should cover the precise work they do. But what if they are unable to obtain that coverage? As a result, practitioners, clients, and communities may experience a reduction in the availability of legal services.
“If, for example, an attorney cannot obtain insurance for debt collection activity, this limits not only the lawyer’s profession but also the public’s access to the lawyer’s services,” Pactor explained.
Jennifer Ritman concurred, saying that in her 30-plus years of offering professional liability insurance via Ritman & Associates, Inc., she has never had a problem finding coverage for Indiana lawyers. However, guaranteeing coverage for all attorneys may make matters more complicated, especially if the insurance market tanked or prices skyrocketed to the point of being unaffordable.
“When you say your ability to practice is dependent on something you have no control over the insurance sector I believe it’s a slippery slope,” Ritman said. “For me, that’s the most difficult aspect.
“She continued, “I’ve experienced concerns when it becomes unaffordable for lawyers if they have a disciplinary case or are practicing in a difficult area of law.” “You can’t predict what the market will do. That is the issue.”
When asked for malpractice advice, Greenwood attorney Patrick Olmstead says the first question he asks is if the attorney is insured. Even if the answer is affirmative, he cautioned, his clients may have a misunderstanding of what they are entitled to.
“Let’s pretend I was representing someone in 2013 and I messed up her case and didn’t inform her,” Olmstead speculated. “It costs her a lot of money, and she discovers it in 2019 and files a lawsuit against me. Well, she’s out of luck if I don’t have insurance in 2019. It makes no difference that I gave her a letter stating that I was covered at the time. I have the option of getting or not getting insurance.”
California legal ethics and malpractice attorney Jim Ham, who is at the center of the national debate, said he opposes mandated malpractice insurance but believes disclosures should be made at the start of an attorney-client relationship for openness. Clients, on the other hand, should educate themselves regardless of whether or not an attorney has coverage, according to Ham.
“Insurance isn’t a cure-all. It’s not a substitute for completing your study, and even if we had it, clients shouldn’t expect it to protect them in their specific situation,” Ham said. “It is in the consumer’s best interests to be informed.”
Uninsured attorneys, according to Ham, frequently accept responsibility for their errors. “Just because you’re uninsured doesn’t imply you’re out to create harm,” he explained.
Is legal malpractice insurance required in California?
There is no necessity for insurance (except for limited liability partnerships or law corporations, as presently required by statute).
What states have no malpractice insurance?
Medical malpractice insurance is not required in the following states, and there are no minimum coverage requirements:
Alabama, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and West Virginia.
Despite the fact that no medical malpractice insurance nor minimum carrying requirements are required in these states, many physicians are still required to obtain malpractice insurance in certain instances. Malpractice insurance is required by many hospitals for physicians with visiting privileges. Furthermore, several healthcare insurance plans demand malpractice insurance for any doctor who participates in their coverage.
When you look into the states that do not mandate medical malpractice insurance, you’ll notice that a doctor still needs malpractice insurance or they risk paying a large quantity of money. They will not be protected if they go barefoot.
In California, for example, non-economic damages are limited to $250,000. However, there is no limit on lost pay. California is an excellent example of a stable medical malpractice market, where even if a physician is successfully sued, he or she may still be forced to pay damages in the hundreds of thousands of dollars. It should be noted that this does not include any legal fees.
Florida is another state where there are no requirements for medical malpractice insurance, but doctors should still buy it. Because of the relatively high expense of insurance before tort reform in 2003, many doctors in Florida elected to go barefoot rather than acquire insurance. However, since 2003, the malpractice insurance market has become significantly less expensive and has stabilized.
Even if a doctor chooses to go naked, there are some regulations that must be met in Florida. They must deposit a bond, establish an escrow account, obtain an irrevocable line of credit letter from a bank or other lending institution that cannot be used for legal fees, and display a sign in their offices informing patients that they do not have malpractice insurance.
Finally, let’s take a look at the state of Nevada. For many years, Nevada’s medical malpractice market was in shambles, and many insurers pulled out of the state. The Nevada Legislature passed amendments in 2002 that set a $350,000 ceiling on non-economic damages, with exceptions for unusual situations and gross negligence. The exemptions were withdrawn because the improvements did not keep doctors in Nevada. As a result, the market has become significantly more stable. When you consider that a doctor can be sued for up to $350,000, it’s easy to see why going bare isn’t a good option.
Are lawyers required to have malpractice insurance in Texas?
No. Only around 60% of the thousands of lawyers practicing in the United States have malpractice insurance, according to estimates. Lawyers practicing law in Texas, unlike those in Oregon and Idaho, are not required to carry malpractice insurance. Similarly, while many physicians and other professionals in Texas must demonstrate proof of financial responsibility or maintain insurance in order to obtain a license, attorneys are not compelled to do so.
Do law firms cover malpractice insurance?
Because most plans are “claims made,” you are normally covered for the work you conducted at the law firm under the law firm’s policy, even if the malpractice claim is not filed until after you have left the firm. This means that the policy in effect at the time the claim is filed is the one that covers the alleged negligent act.
What does defense inside the limits mean?
Legal fees can quickly deplete your policy limit, forcing you to pay for claims and settlements out of pocket. When purchasing or evaluating any of your liability insurance, whether professional, general, or product, you should check to see if the policy offers coverage for legal defense outside or inside the boundaries of liability.
- All defense costs (attorney’s fees, court charges, investigation, and filing legal papers) are taken first from the policy limit, which reduces the total amount of money available to pay for monetary damages granted by a verdict.
- There are various limits available for legal defense expenditures and court-awarded damages with defense outside the limit coverage. As a result, defense expenditures that exceed the policy limits do not reduce the amount of money available to pay settlements resulting from a lawsuit.
This is important to remember because if your firm is sued, the type of coverage you choose will play a big role in determining your possible financial liability.
“In any employment lawsuit filed in federal court, there is a 16 percent probability the award (excluding attorney fees) will surpass $1 million, and a 67 percent chance the award will exceed $100,000,” according to Jury Verdict Research. The average cost of defending a product liability claim, according to the Insurance Information Institute, is $876,000. These figures show the financial consequences of not being sufficiently insured.
So, let’s look at a professional liability example to better understand the distinction between inside and outside liability coverage limitations, as well as the need of selecting the appropriate quantity of insurance.
Employment Practices Liability Insurance is an example of professional liability coverage (EPLI)
Most business owners regard their staff to be family, and many consider their firm to be a close-knit community. When things are going well, this may be true, but what happens when something goes wrong and an employee files a lawsuit against you?
EPLI (Employment Practices Liability Insurance) is a sort of professional liability insurance that protects an employer from claims of wrongful termination, sexual harassment, discrimination, and other types of employment-related claims brought by current or potential employees.
Assume you’re the owner of Sam’s Sprockets and your EPLI coverage is worth $1 million. A jury awards $900,000 to a group of employees who sue the corporation for sexual harassment. Assume that the legal defense costs will be $1 million dollars. If you have liability coverage that is limited to the limits, your insurance will be spent, and you will be responsible for paying $900,000 in damages out of pocket, which may be a major financial burden for many businesses. Alternatively, if you defend yourself outside of the boundaries, your insurance will pay all of your expenses.
Which state has the highest medical malpractice premiums?
According to the National Practitioner Data Bank, New York had the most medical malpractice reports (16,688) from 2009 to 2018, followed by California and Florida, with 13,157 and 10,788 reports, respectively.
There were just 126 total reports of medical misconduct in North Dakota, far and away the lowest in the continental United States.
What state had the highest total amount of medical malpractice payouts?
New York had the greatest total medical malpractice payments, totalling $7.025 billion, according to NPDB data, followed by Pennsylvania with $3.416 billion. Medical malpractice payments in North Dakota were the lowest, at only $28.35 million.
Are Colorado attorneys required to have malpractice insurance?
Colorado lawyers in private practice are obliged by Supreme Court regulation to report whether they have professional liability (malpractice) insurance to the Colorado Supreme Court Attorney Registration Office on an annual basis. Malpractice insurance is not required for all Colorado lawyers in private practice.
What are client protection funds?
What is the Client Security Fund, and how does it work? This is a discretionary fund that can compensate clients who have lost money or property as a result of a California lawyer’s theft or dishonesty. It’s a State Bar-funded initiative that’s totally funded by California lawyers.