Law Firm Business Insurance
Every law firm needs insurance. Knowing which type of insurance you need and the best place to get it is the next step.
This article will cover the main types of business insurance and help you find the best law firm insurance.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Law Firm
The most common and comprehensive type of law firm business insurance is general liability insurance. We recommend general liability insurance as your first line of defense against a variety of the most general and commonly occurring claims.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While a law firm isn’t legally required to carry general liability insurance, operating without it is extremely risky. If your law firm is sued, you could face fees totaling hundreds of thousands of dollars (or more).
Find the Right Policy at the Best Rate
Using a fully online insurance provider saves time and money and offers the most accurate quotes.
Cost of General Liability Insurance
On average, law firms in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a law firm to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
Start an Online Quote for Insurance
Finding the most affordable premium starts with getting accurate quotes from highly rated providers.
Common Situations That General Liability Insurance May Cover for a Law Firm
Example 1: A client is coming up the steps to your office when she slips and breaks her ankle. She decides to sue your firm, claiming the steps were unsafe. Your general liability insurance will pay for your legal defense fees, including the cost of a settlement.
Example 2: One of your paralegals is rushing to file paperwork when she rounds a corner and accidentally knocks down a client. The client breaks her wrist and asks that your business pay for her medical treatment. Your general liability insurance would likely cover this expense.
Example 3: You have been using a new logo that you think really represents your firm. Unfortunately, a competing law firm has filed a lawsuit over the logo, claiming it is too similar to their own. Your general liability insurance policy will pay for your legal fees to defend your business.
Check out our review of the Best Small Business Insurance Companies.
Other Types of Coverage Law Firmes Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all law firms should obtain:
Workers’ Compensation Insurance
Your state likely requires that you carry workers’ compensation insurance if you have employees. Your policy will protect your employees if they are injured performing job-related duties. For instance, if a receptionist gets carpal tunnel on the job, your policy would pay for her medical treatment and help to cover her lost wages while she recuperated.
Professional Liability Insurance
A professional liability policy designed specifically for your law firm would help protect your business against negligence claims due to mistakes or failure to perform. If a client claims that your firm caused him or her injury, your policy would pay for your legal defense and for a settlement if one was necessary.
Commercial Umbrella Insurance
While a general liability insurance policy is usually enough to protect your business, there are circumstances where the limits of your policy could be exceeded—like if you lose a major lawsuit. An umbrella policy kicks in when the general liability insurance stops paying so you can avoid having to pay the remaining damages out of pocket.
Commercial Property Insurance
All of your commercial property, including office furniture, computers, and legal references, would be costly to replace if they were lost in an unexpected event like a fire. Your commercial property insurance would help to pay for replacement costs as long as the loss was caused by a covered event.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your law firm:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Business Insurance Is the Best Way to Protect Your Business
If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.
Be sure that everything you've built is safe by getting business insurance.
Law Firm Business Insurance FAQ
Can I buy business insurance online for my law firm?
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a law firm?
You should invest in business insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my law firm from everything?
Not necessarily. Certain exceptions may be written directly into your law firm insurance policy, and some perils may be entirely uninsurable.
Is general liability the same as business owners?
A general liability insurance policy covers only liability losses. A business owner's policy covers both liability and property losses.
How do I choose the best general liability insurance?
The best general liability coverage for your business really depends on the amount of coverage you’re comfortable with and how often you expect to file a claim. A relatively safe business with a very low risk of accident or legal liability could opt for lower premiums with higher deductibles.
However, if you are in an accident or injury-prone industry or are making advertising claims about the effectiveness of your service or product, you may wish to consider more extensive coverage. We recommend using a digital insurance provider like Next Insurance.
Do I need business insurance if I already have an LLC?
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.