Generally, insurance acts as your shield and/or cushion if things go south. You know that better than anyone, though. You’re an attorney, after all. However, many freshly-graduated and newly-solo attorneys fail to realize the importance of having malpractice insurance. Some would even argue that it’s not needed at all, according to the law. So, how true is this statement?

State Requirements for Lawyers

First, let’s discuss the legal requirements. Surely, if it’s such an important form of insurance, it should be a requirement for all practicing lawyers, right? It turns out, malpractice insurance is not required by state laws for most lawyers. That’s why many attorneys fail to realize its importance. However, what is legally required in at least 26 states is for attorneys who don’t have malpractice insurance to alert their clients of the fact that they aren’t covered, often in the form of a written and signed disclosure.

Why Lawyers Need Malpractice Insurance

So if it’s not a legal requirement, how important is it really? According to the field experts at Balsiger Insurance, it’s very important. Generally, lawyers can be liable for malpractice lawsuits resulting from failure to implement the law correctly, misfiled paperwork, failure to stick to instructions, conflict of interest allegations, failure to get consent from clients, or fraud. Any of these mistakes is enough to have you or your law firm up to your knees in court or settlement expenses.

There’s no doubt that you try your best to uphold the professional and ethical code that most lawyers abide by. However, sometimes, clients may get out of their deal with failed expectations despite your best efforts – and what do disappointed clients do? They look for someone to blame, and you might be the target of their misplaced anger. Unfortunately, sometimes their blame is well-placed, resulting from situations out of your control or due to the lack of experience. After all, no one is above making mistakes, and even the most experienced lawyers can fall into mistakes and make erred professional judgments.

This is where malpractice insurance can save you a ton of costs and protect your mental peace. Malpractice insurance is also commonly referred to as professional insurance or error and omissions insurance. As you can make out from its name, it protects you in the face of lawsuits filed by clients claiming negligence, mistakes, or any form of unintentional malpractice. It can also cover the costs that come with lawsuits, settlements, and the financial repercussions of your mistakes.

What Malpractice Insurance Covers

Frankly speaking, the coverage of malpractice insurance depends on the providing company. However, it’s safe to assume that most malpractice insurance contracts cover errors and emissions and negligence filed against you or your firm in a law area that’s outside of your specialization. It will also cover any other roles you carry out as an attorney, such as acting as an executioner or a trustee. However, malpractice insurance does not cover malicious and fraudulent acts, property damage, bodily injury, internal lawsuits between attorneys of the same firm, or intentional malpractice forms.

Although state laws do not legally require it, malpractice insurance is crucial for any firm to have. It’s especially important for fresh and solo lawyers to get insured. This insurance will cover most financial costs that come with lawsuits.