A record number of California apartment buildings have had their insurance non-renewed this year. Some big-name carriers are non-renewing every apartment building in the state. Though ultimately this turmoil is driven by the large number of recent wildfire claims in CA, apartment buildings in the heart of urban centers such as San Francisco and Los Angeles are being non-renewed all the same. Owners of apartment buildings can sometimes feel overwhelmed by this upheaval, especially if they’ve enjoyed stable insurance for the past few decades. If your apartment building has been non-renewed, what you need is a good insurance broker to help you replace that policy. We can help!
At Mighty Oak, our brokers understand how to navigate the nuances of a complex market, and the challenges of owning and managing multiunit apartment buildings. We understand that you face unique risks with tenants living in your building. Our apartment policies include property coverage for the building as well as landlord liability coverage. Our goal is to match the coverages that are on your current (non-renewing) policy, help you protect your investment, and satisfy your lender. And for the individual renters who need insurance for their personal belongings, we work with insurance agents who specialize in personal insurance as well.
If your current insurer has non-renewed your apartment building’s insurance policy, we will work to replace it with a policy comparable to what you previously had. If your price has risen considerably, we will work to find you a lower-priced quote. Along the way, we are happy to offer advice and guidance for steps you can take to lower your future insurance costs and widen your insurance options. We can even help if your non-renewal is due to a history of claims. We work with insurers of all kinds, including those who specialize in “distressed” properties, meaning properties that have had a series of claims, and even currently-damaged buildings and buildings under repair. We have options to insure apartment buildings of any size, and can even find you a quote if you (the owner) occupy one of the units.
Our brokers specialize in apartment building insurance in California, Florida, Texas, Nevada, and we are licensed in other states as well. We have been especially successful with non-renewed apartment buildings in urban areas, and apartment buildings facing a steep insurance price increase.
It can be tricky to find the right insurance for an earthquake retrofit contractor, but we can help!
A general contractor recently called to ask if we can help with his insurance. He is a licensed earthquake retrofit contractor who has been working in construction for decades. He was struggling to find insurance that would actually cover his core operations: earthquake retrofit and foundation repair. When he met us, he had just purchased a policy that officially offered him no coverage for his main services.
Here was the message he had just received from his current broker:
Per our discussion, the policy that you purchased with us doesn’t cover foundation repair or earthquake retrofitting of any type. Unfortunately we must cancel your policy immediately. We will be unable to provide a replacement policy for you. We are sorry for the inconvenience.
At that moment the contractor had many retrofit jobs running simultaneously across the Bay Area, so this insurance problem had to be corrected immediately.
How did he find himself in this situation? The reason is because many brokers who work with contractors use instant-quoting portals that generate quick and cheap insurance quotes. These quotes are handy because of the speed and price, but they are usually riddled with exclusions. For a contractor who performs standard remodel work, these sorts of quotes might be the perfect fit. But for an earthquake retrofitter, the exclusions render these cheap quotes worthless.
Here’s an example of such an exclusion:
Even though that exclusion for seismic retrofitting work seems pretty obvious, it’s still easy to miss it if the broker doesn’t read the quote carefully. Sometimes the exclusions are even more subtle, like this exclusion, which is often buried on page 80-something of the policy:
The contractor who called us had purchased a cheap policy that his broker had found for him instantly, via a portal that did not ask too many questions. The broker did not review the exclusions before starting the insurance, and carelessly sold a low-priced policy that contained an exclusion for all kinds of retrofitting work. A few weeks later, when the contractor was reviewing his new policy, he discovered the exclusion and called his broker. Only then did the broker realize that the insurance he had sold was worthless. The contractor realized, to his dismay, that he had been operating essentially uninsured for the past three weeks.
We were able to fix this problem for the earthquake retrofitter because we are experts at construction insurance of all kinds. We always read through the policy language before we put a new policy into force, and we know which exclusions to look for. We also know which insurers specialize in specific areas of construction which are often excluded on standard policies, such as earthquake retrofitting, bridge work, utility work, new construction, and remodel work performed for large HOAs. We made sure that the retrofitter got a liability policy that insured his actual operations and did not include any worrisome exclusions, so he could continue with his jobs uninterrupted.
If you are an earthquake retrofit contractor, or any kind of contractor who has struggled to find proper insurance, please reach out. We can help with general liability, workers comp, commercial auto, bonds, and any other kind of construction-related insurance.
Most importantly, we will make sure the job is done right the first time.
The California insurance market is in a state of turmoil. A handful of big-name carriers are refusing to issue any new quotes in the state, while others are non-renewing existing clients. For small Homeowners Associations (HOAs), this can be a stressful time to seek insurance. Many HOAs (even those in urban areas) have been non-renewed by their long-time carriers, and must go out on the market for new insurance at a time when options seem limited and prices are rising. We can help! We specialize in HOA insurance in California, and can help non-renewed HOAs get new policies!
At Mighty Oak, our brokers understand how to navigate the nuances of a complex market, and the realities of shared homeownership. We understand that HOAs are unique, and as brokers we know how to properly insure them. Our master HOA policies include property coverage for the building as well as liability coverage for the HOA itself. We can also often add coverages like equipment breakdown, directors and officers coverage, sewer back-up, and crime insurance. Our goal is to match the coverages that are on the HOA’s current (non-renewing) policy. And for the individual condo owners who need insurance for their personal belongings, we work with insurance agents who specialize in personal insurance as well.
If your current insurer has non-renewed your HOA’s insurance policy, we will work to replace it with a policy comparable to what you previously had. If your price has risen considerably, we will work to find you a lower-priced quote. We can help even if your non-renewal is due to a history of claims. We work with insurers of all kinds, including those who specialize in “distressed” properties, meaning properties that have had a series of claims, and even currently-damaged buildings and buildings under repair.
Our brokers specialize in HOA insurance in California, Florida, Texas, Nevada, (and we are licensed in other states as well). We have been especially successful with HOAs in urban areas who have been non-renewed or whose prices have risen dramatically.
As recreational and medical cannabis has grown to enjoy more legal status at the local and state level in the last decade or so, the industry has grown from a relatively small, largely underground status into a multi-billion dollar economic engine. From dispensaries to indoor grows, new businesses are cropping up all over the place.
More and more entrepreneurs and individuals are entering the Cannabis industry in various services and sectors, from industrial scale cannabis farming to wholesale brokering to retail and refinement. Inevitably, insurance questions arise as businesses are formed and business relationships take shape.
Up until very recently, the insurance industry lagged significantly behind the explosive growth of the cannabis industry. While many carriers still refuse to do anything cannabis related, we have cultivated a crop of insurers that specialize in Cannabis risks of all types, sizes and market share. We have developed our expertise in this field through meticulous research and experience with different types of businesses – expertise that you deserve as you work to bring your business online, or grow it to the next level.
Here are some of the industry sectors that we specialize in:
Medical Dispensaries
Recreational or Combined Med/Rec Dispensaries
Cannabis Tour Businesses
Cannabis Industry Consultants
Edible Manufacturing
Oil Concentration Manufacturing
Harvesting Contractors
Indoor Grow Insurance
Outdoor Grow Operations
Potency and Purity Laboratories
Give us a call so we can get you what you need to get rolling.
Many businesses and professionals face frivolous lawsuits as a result of their work, but lawyers probably face this more than anyone else. The source of these lawsuits can be unpredictable, and without insurance you could be left with tens of thousands of dollars in legal defense bills paid out of pocket. With the proper insurance, though, you can rest easy, knowing that you won’t have to come out of pocket to defend yourself from frivolous lawsuits.
What are some examples of frivolous lawsuits that lawyer’s professional insurance would cover?
You lose a case due to no fault of your own, but your client feels that you lost the case due to ‘incompetence’ or some other unsubstantiated error. They file a complaint against you with your State Bar. This situation can cost thousands or even tens of thousands of dollars in your own defense. You must pay to defend yourself even if the complaint is dismissed – insurance will cover these disciplinary defense proceedings, often without a deductible.
You share an office with another attorney, and they are sued by one of their former clients over a business transaction that did not meet their expectations. They sue you as well, claiming that you were also their attorney since you shared an office with their actual attorney. This can also cost tens of thousands in defense costs which would be covered by insurance – it also helps to get something signed by clients of another attorney that you share space with stating that you are not representing them.
The problem is, that sometimes after an insurance company covers you for such a frivolous claim, they will cancel, non-renew or increase the price of your insurance policy. At the end of the day, these carriers are looking to make a profit, and if they pay a claim they might view you as a bad bet, even if you fixed the problem (perhaps you stopped sharing an office with another attorney).
This problem is compounded by the fact that your claims history follows you and affects your eligibility for insurance elsewhere. Solving this problem requires a broker that has specialized access to and experience with certain insurance carriers that have a higher risk tolerance.
If you find yourself in a situation where you’ve faced a frivolous lawsuit (with or without insurance), and you now want to acquire insurance for the first time or replace your canceled or more expensive policy, reach out to Mighty Oak.
We specialize not only in lawyer’s professional liability but also professionals with a claims history.
Many property owners are unaware of the fact that major construction is excluded from their standard insurance policy. This is true for homes, commercial buildings, and mixed use properties. If an owner wishes to renovate their property, changes must be made to the insurance policy, since the standard property policy most likely excludes any and all claims pertaining to a building under construction. In fact, many of these policies contain exclusions so strict that even if something unrelated to the construction damages the property during the remodel, it results in a denied claim. Let’s examine the following policy language from a standard homeowners insurance policy:
More likely than not, any loss would probably be at least indirectly related to the construction/renovation. In most cases it might be difficult to prove that a loss had NOTHING to do with renovation/construction, even if that is in fact the case. For example, if a kitchen fire breaks out in a building under construction, the presence of construction materials in the home may cause the fire to spread more rapidly an destroy the home. In this situation, the policy language above may be used to exclude coverage altogether, and thereby render the insurance policy worthless. During a period of construction, an owner must make sure to get a (temporary) insurance policy that is specifically designed to account for a building under construction.
So, what is the alternative? A
Builders Risk
(also referred to as a Course of Construction) policy is the answer. This is a type of packaged property and liability insurance policy that accounts for the risk posed by a construction project. Properties under construction often have higher risk for fires, theft/vandalism, water damage, and even risk of falling objects injuring people or property. A Builders Risk policy accounts for these risks. These policies also account for both the existing structure and the cost of the building materials on the property, whether on the premises or in transit.
Essentially, the way that a standard homeowners policy becomes a Builders Risk policy, is with the addition of an endorsement for Builders Risk coverage. Here’s an example of the language, clearly expanding coverage to construction:
For commercial buildings under construction, oftentimes a separate Builders Risk policy will temporarily replace the regular property policy, until construction is complete. Typically, these policies will last anywhere from 3-12 months, and are typically not renewed. Once construction is done, the Builders Risk policy is dropped, and the standard property policy is brought back again. For projects that take longer, such as new construction for larger buildings, longer policy terms are an option.
Many standard homeowners carriers do not offer Builders Risk policies. If this is the case with your carrier, we can help secure you a temporary Builders Risk policy to properly cover your home/building during construction. When construction is complete, we simply cancel the Builders Risk policy and refer you back to your previous insurer or we can make a referral to a trusted colleague.
What types of insurance does an interior designer need?
The main type of insurance an interior designer will need is
Professional Liability
(also known as Errors and Omissions). This is the insurance most likely to be required by the designer’s clients, whether the designer works directly with homeowners or as a contractor for a larger firm.
Professional Liability is basically “mistake insurance”. If the designer makes a costly professional error, this insurance steps in to foot the bill. This might mean a design error that delays a construction project, a mishap in ordering materials that doubles the cost of a project, or any other kind of on-the-job mistake. As long as the mistake was an honest professional error, this type of policy protects the designer from the large expenses (or court costs) that can come with fixing the mistake.
Ideally the policy language should make it clear that any professional error is covered. Here is an example of this kind of broad policy language:
We agree to pay on your behalf all sums which you become legally obliged to pay (including liability for claimants’ costs and expenses) as a result of any claim first made against you during the period of the policy arising out of your business activities for any negligent act, error, omission, misstatement or misrepresentation.
In other words, this policy will pay for any professional error the designer makes. It will pay for legal fees, court costs, and damages in the event the designer is sued for negligence, and will even cover the costs of a frivolous lawsuit. Ideally, the policy will say something like “We have a duty to defend any covered claim, even if such claim is groundless, false, or fraudulent.” This means that even if the carrier thinks a lawsuit is groundless, they are bound by their own contract language to defend the designer.
For designers who work as contractors for larger design/development firms, this type of insurance is almost certainly going to be a requirement prior to starting work. Firms that contract with independent designers want to make sure that if a mistake occurs, it isn’t going to bankrupt the designer (or become the responsibility of the firm). A policy with $1mil. limits is an affordable way for the designer to protect his/her own business, as well as the clients and firms he/she works with.
Many designers also have to visit jobs sites to meet with clients, architects, or general contractors. Therefore it may also be wise for the designer to add a
General Liability
policy as well.
General Liability insurance protects the designer in the event someone is injured at the job site and blames the designer. For example, while meeting with the client at the construction site, the client bumps his head and decides to sue the designer (who had set up the meeting). General Liability will foot the bill for claims related to bodily injury and property damage, whether the designer is actually to blame for the injury or not. For designers who meet with clientele at or near construction sites, a General Liability policy can be an crucial piece of protection.
When combined, these two policies shield the designer from most of the everyday risks associated with their work: they protect the designer from claims stemming from professional mistakes, design flaws, injuries on a job site, accidental damage to someone else’s property, and frivolous lawsuits.
What are some ways a designer can tell if their policy is high quality?
First, make sure the policy is part of an Architect’s and Engineers program. The front of the policy should look something like this:
This means that the policy takes into account the risks that come along with working in construction, even peripherally, and contains broad contract language and many industry-specific coverages. Long story short: this policy is more likely to pay a claim related to construction than a “miscellaneous” (a.k.a. boilerplate) Professional Liability policy.
Most importantly, an “Architects and Engineers” style policy will not contain the kinds of worrisome exclusions often found in “misc.” professional liability policies. It is crucial that the policy not contain clauses that exclude coverage for core parts of a designer’s business.
For example, say an interior design firm brought on an in-house engineer. Almost every “misc.” professional liability policy contains the following exclusion:
So all claims pertaining to engineering are automatically excluded from this policy. If the engineer makes a professional error, the legal fees and claim costs would NOT be covered! This is the danger of a “misc.” policy, rather than one tailored to a designer’s actual operation.
Construction-related lawsuits can take many forms. For example, a homeowner hires a general contractor who then sub-contracts in a number of electricians, plumbers, and other contractors. Meanwhile, the owner hires an interior designer to plan the interior. Ten years after the job is complete, the homeowner discovers a construction defect in the home, and decides to sue everyone that ever worked on the home in any capacity, including the interior designer. Even though the designer is not at fault and the job was a decade ago, he/she still has to pay for a lawyer, take time off work to appear in court, and pay travel expenses, just to make the claim go away. The interior designer’s insurance policies should cover all of these costs. Therefore the policy must contain language that encompasses even these sorts of peripheral construction lawsuits.
Imagine that designer had a “misc.” professional liability policy that contained the following typical exclusion: “This policy excludes all claims based upon, arising out of, directly or indirectly, or in any way involving suitability in design, or performance of any structure with respect to its ability to bear weight”. This policy language is designed to exclude coverage for just the type of lawsuit mentioned above. Though the designer had nothing to do with the defect, the carrier will use this language to deny the claim and refuse to pay the defense costs. In construction, lawsuits like this can pop up any time, so the policy must protect the designer from this common risk.
There are other ways to tell if an interior designer insurance policy is high quality:
Look for industry-specific extra coverages, such as coverage for Defense of Licensing Proceedings, FHA/OSHA/ADA regulatory proceedings, and automatic coverage for the designer’s sub-contractors.
A quality policy might contain Subpoena Assistance and Supplementary Payments, which covers the costs associated with taking off work or traveling to appear in court during a construction-related lawsuit.
Ideally, the policy should include something called “complimentary future claim mitigation”. This means that if the designer even suspects there may have been an error, or a dissatisfied (or overly litigious) client, the designer can contact the carrier before the situation turns into an actual claim. The carrier will advise the designer on how to address the situation and keep it from getting worse.
Another favorable coverage is Public Relations Crisis Management. In the event the designer needs to hire a public relations firm to repair the company’s reputation after a lawsuit or professional error, the carrier will pay for those costs as well.
In conclusion, an interior designer’s insurance needs are more intricate than meets the eye. There needs to be coverage for all kinds of construction-related lawsuits, and policy language that is tailored to fit the designer’s business.
If you would like to speak to a broker who has specialized in interior design insurance, reach out today to get a quote. They are also happy to review your current policy and explain what’s in it.
Businesses that deal in sensitive data or personal information face an array of threats to the safety and integrity of that information. The loss of this information via a breach or hacking incident can lead not only to massive business interruptions, but also delays and potentially crippling regulatory fines. There are myriad new laws that regulate how businesses deal with Personally Identifiable Information (PII), trade secrets, and other sensitive data. Due to this regulatory complexity, a hacking event can be a nightmare for a business owner.
Luckily there is insurance available that can respond in the event of a hack, breach, or other internet-related mishap: Cyber Liability Insurance. Besides the steps that businesses can take to mitigate the risk of a cyber incident on their own, Cyber Liability Insurance is one of the best ways to account for the inherently unpredictable risk that comes with storing or dealing in sensitive information.
Cyber Liability Insurance contains many coverage options that can be tailored to your operation to ensure a good fit. What follows is a summary of the possible coverage options and their applicability:
Information Privacy
Maintaining secrecy and confidentiality around sensitive information is one of the main reasons to buy cyber liability insurance for your business. This coverage can be tailored to help you respond to the loss or theft of this information in a timely manner without having to pay for the entire incident out of pocket.
Available coverages include:
Information Privacy Liability – this pays for your defense and any settlement up to the policy limit as a result of losing sensitive data, trade secrets, PII, etc.
Regulatory Liability – the loss of regulated PII (such as medical records) can carry significant regulatory penalties as well as extensive investigation and court proceedings to determine liability. This coverage pays for your defense and settlement for any actions a regulatory agency might take against you.
Event Response and Management – Most cyber liability carriers offer a suite of services to help make you whole in the event you do suffer a breach that results in the loss of sensitive information. This is essentially a white glove response to assessing what happened, how to fix it, and how to prevent future issues, all paid for by the insurance carrier.
Network Security
In the event that your network is breached by a hacker, you can become a vector for spreading malicious code or other computer viruses to other computers tied to your network or even beyond.
This coverage is usually broken into two pieces: 1) liability coverage in the event your network causes problems for others, and 2) event response and management coverage, very similar to that offered under the “Information Privacy” coverages.
Business Interruption
In the wake of a cyber incident, business operations are likely to be substantially altered while handling damage control and recovery for your clients. This time period can have a big effect on revenue, not only during the recovery process but also for sometime afterward.
Business Interruption is included on most cyber liability policies for just this reason. Furthermore, most policies will pay business income regardless of whether interruption originated in your network/system or if it originated from one of your service providers.
Cyber Extortion
Also known as a “ransomware” attack, cyber extortion is becoming more and more common. This coverage will pay the ransom up to the policy limit, as well as assistance to reduce the possibility of this happening again.
Financial Fraud
Online fraud can take many forms. Cyber Liability policies typically divide the possible forms of fraud into the following two categories:
Social Engineering – the use of deception to manipulate individuals (employees, owners, managers, etc.) into divulging information that is personal or confidential, for the purpose of use in further fraud or personal enrichment.
Computer Fraud – any intentional, fraudulent or unauthorized input, destruction or modification of electronic data by a foreign entity, provided that such fraud causes a loss of funds/securities whether on behalf of your business or any of your clients.
Media Content
The final coverage that is commonly found on cyber liability policies pertains to Media content, which is quite broadly defined.
The Media Liability portion confers coverage in the following situations:
Defamation, libel, slander or tort that causes harm to any person or organization
Infringement of any slogan, logo, trademark, etc.
Copyright infringement, plagiarism, piracy, misappropriation of intellectual property (provided it was unintentional)
Invasion of privacy, including accidental disclosure of private facts or data
Invasion of privacy including trespass, harassment or eavesdropping
The media content coverage also typically pays to restore a firm’s reputation with the public after a cyber incident – something that is very important when a business is trying to restart operations after a serious breach or similar incident.
If you run a business that relies on or deals in sensitive information, trade secrets, PII, HIPAA data or anything similar, then you are at a heightened risk for any of the possible situations outlined in this article.
If you want to know more about how to acquire insurance for sensitive data or information, please reach out to us. There’s never any cost to get a quote and have a discussion about your situation.
In this article we will discuss Lawyers Insurance, also known as Errors and Omissions and
Professional Liability
.
What is Professional LiabilityInsurance?
Lawyers Insurance, Errors & Omissions, and Professional Liability all mean the same thing. This type of insurance protects a law firm in the event an attorney (or other employee) makes an error, omission or oversight that causes harm to their client. It pays for the firm’s legal defense, as well as the settlement or judgement made against the firm, up to the policy limit.
In other words, this is Mistake Insurance. If an attorney makes a professional error, Professional Liability should be there to absorb most if not all of the financial liability.
This insurance is also so much more than that! A Professional Liability policy also protects the firm from frivolous lawsuits. So if a particularly litigious client files a groundless lawsuit against his own lawyer, this insurance will pay the lawyer’s defense costs, even if the lawyer made no error whatsoever.
In that sense, Professional Liability insurance is really Lawsuit Insurance. If anyone sues the law firm and claims the firm committed a wrongful act, the insurance company will have a duty to investigate the situation, defend the law firm, and pay damages if necessary. It pays whether the firm committed an error or not.
Many additional types of coverage can appear in a well-constructed Professional Liability policy, but lawsuit protection is the foundation of the whole policy. This pillar is what provides piece of mind to a legal practice. If a lawyer makes an honest mistake while working with a client, the lawyer doesn’t have to fear that the ensuing litigation will lead to bankruptcy for her firm. If a lawyer advises a client to settle but later the client has a change of heart and decides to sue his attorney, Professional Liability insurance is there to defend the attorney so he can continue working for his other clients. If done correctly, a professional liability policy allows a firm of attorneys to practice their craft without distraction, since a large portion of their liability has been absorbed by an insurance carrier.
The insurance contract itself must be crystal clear on this point. Here is a sample clause from a real Professional Liability policy:
Notice how the policy states that the carrier will pay “all damages” that the firm becomes “legally obligated to pay”, up to the “limits of liability”. As with any contract, the definitions of the words themselves affect the whole meaning of the document. This is why it is crucial to work with an experienced broker who understands the complexities of Professional Liability insurance. An attorney’s broker should know what to look for in the policy so he can determine which quotes contain the most favorable policy language, and clearly explain to his client (the attorney) the pros and cons of the policy language.
We will explore policy language more a bit later in the article. For now, let’s talk about why attorneys need Professional Liability, while other types of businesses might not need it.
Why do Lawyers need Professional LiabilityInsurance?
Lawyers, similar to accountants, doctors, financial advisors and the like, make their living by providing legal advice and related services to their clientele. Throughout the course of providing this service, lawyers will make statements, decisions and recommendations that their clients will rely upon, regarding matters of serious importance to them, financial or otherwise.
While most lawyers have a well-honed understanding of the law and take care not to make errors or overstep their authority, every time a client relies upon and acts upon legal advice there is potential liability for the attorney who gave the advice. This is compounded by the possibility of a lawyer making honest mistakes or errors as a result of the pressures that everyone faces: deadlines, demanding clients, sensitive situations, unrelated stress.
When a client relies on legal advice, they expect things to play out according to that advice. As we all know, things do not always turn out as planned. Even if an attorney does his job right, his client could still lose time and/or money, or suffer mental anguish. This can often lead to a written demand for compensation alleging any number of things. Attorneys are already familiar with this reality, since this is the every day risk of practicing law.
This risk of lawsuit creates a unique insurance need. Many other types of businesses don’t need Professional Liability insurance at all. For example, a deli or an electrician both need a completely different kind of insurance. What they need is insurance to protect them in case they accidentally injure someone physically (such as if a customer slips on the deli’s wet floor, or the electrician’s tools fall and injure someone), or in case they damage someone’s property (such as if the electrician accidentally starts a fire in a client’s home). These protections are provided by a standard
General Liability policy
.
Most attorneys, on the other hand, have almost no risk of causing physical injury or property damage over the course of their daily activities. The risks attorneys take on by practicing their profession are of a very different flavor than the risks absorbed by deli owners. If an attorney’s client sues the attorney for giving poor advice, their General Liability policy would not pay a dime. This is why a General Liability policy is never sufficient protection for a legal practice. Clearly an entirely different type of insurance is needed to properly cover these types of claims. That’s exactly what Professional Liability insurance does.
Even the language used to describe a typical claim reveals that lawyers need a unique insurance product. “My lawyer gave me poor advice” is a much more abstract claim than “my electrician burned down my house”. It is harder to define, more likely to carry some nuance. Therefore the policy language in a Professional Liability policy needs to account for that ambiguity, and clearly define the situations where the policy is obligated to pay.
The policy must be written in such a way that it systematically absorbs all the liability risks associated with running a legal practice, so a boilerplate (AKA “miscellaneous” professional liability) policy won’t suffice either. The broker must make sure that the entire operations of the legal practice are protected with specifically tailored policy language. The ultimate goal is to have a policy that is so much in the attorney’s favor, that the insurance company will be obligated to pay any covered claim (we will discuss “misc.” policies in more detail later in the article).
The bottom line is that lawyers need a unique type of insurance. They also need an experienced broker to act as a guide to the policy language. If you run a legal practice, make sure to choose a broker who cares more about diligence than about closing a deal at all costs. A good broker will shop around to lots of carriers, then offer the law firm a clear comparison of the quotes. The broker and law firm may discuss price, coverage, and policy language before coming to a decision, and the broker’s primary objective should be to make sure the law firm gets the most favorable policy language possible. Then at renewal, the broker should shop around all over again, to make sure the law firm’s price is always competitive and the coverage is always the best available.
If your broker doesn’t meet that standard, contact us today to get a full shop-out of your Professional Liability policy.
Learn from our Experience:
This section is an FAQ/Glossary of the most important considerations and details when it comes to Lawyers Professional Liability insurance. If your question isn’t answered here, please let us know so we can address your specific inquiry and update this living document.
What are the legal requirements regarding Professional Liabilityinsurance in CA?
The State Bar of California does not require attorneys licensed in California to carry Professional Liability insurance. However, attorneys without this insurance are required to disclose this fact to clients for whom legal representation will exceed four hours (source).
For this reason and the arguments laid out previously, the vast majority of practicing attorneys carry some form of Professional Liability insurance.
If I have a hold harmless/indemnification agreement in my client engagement contract, do I still need Professional Liabilityinsurance?
This is a bit of a trick question, because attorneys cannot have indemnity or hold harmless language in their engagement agreements, as prohibited under the California Rules of Professional Conduct (CRPC 1.8.8). But for professionals who can legally use hold harmless agreements, here is some useful information:
While a hold harmless agreement can be helpful, it is not a substitute for having insurance to handle your legal defense and any resulting settlement. Even with such hold harmless agreements in place, a claim against you may still force you to pay attorney fees, lose income while you appear in court, or at worst pay damages anyhow. Insurance exists to cover all these costs.
We typically advise that you consult with a business attorney who specializes in client engagement contracts, to ensure that your contract “dovetails” with the language in your Professional Liability insurance policy.
What do Claims Made Coverage and Retroactive Date mean?
Most Professional Liability policies provide coverage on a claims made basis, meaning that the policy covers the work that you are doing now, as well as work that you completed in the past. If a client from years ago comes back claiming you made an error on an old case, a well-constructed claims made policy can cover that old work. If done correctly, this type of policy can protect an attorney for work he did all the way back to the beginning of his career.
While criminal and civil laws often come with statutes of limitations, insurance does not. Carriers are allowed to set their own terms and come to their own agreements with insured parties. In other words, if you need a new Professional Liability policy, and you need that policy to cover work from many years ago, the policy can be designed to provide your firm with the decades of protection you require.
How far back in the past will your claims made policy cover you? That is determined by your retroactive date.
Your retroactive date is the earliest date that work you performed for a client must have occurred in order to be covered by your Professional Liability policy. That means a recently filed claim involving work you did years ago will only be covered if the work was originally done after your retroactive date.
So imagine it’s the year 2020, and you have a retroactive date of 1/1/2015. Your current policy term is 1/1/2020 to 1/1/2021. Say you did work for a client in 2016, but they didn’t notice your error until August 2020, which is when they file the claim. Though the date of the claim is Aug. 2020, your actual error occurred back in 2016. The retroactive date therefore encompasses the date of the error, so the new policy will cover this new claim.
HOWEVER, if you lose your retroactive date (for example if an inexperienced broker switched you to a new carrier without making sure the new carrier continued or “picked up” your retroactive date), then your new retroactive date is now the date of inception of the new policy: 1/1/20. This means that NO CARRIER will cover your firm for mistakes or wrongful acts committed before that date. (As an aside, if your broker makes such an error and that error causes you financial harm, you may be entitled to file a claim against your broker’s Professional Liability policy.)
If you’ve only ever had one policy in place your entire career, this is a non-issue since your policy has covered you the whole time. However when you switch to a new carrier, it is crucial that they pick up your retroactive date from the expiring policy, so that mistakes or “wrongful acts” from years ago will be covered by the new policy. Your broker must advocate for you with the carrier, and check carefully to make sure the insurance quotes have an acceptable retroactive date.
If you break off from a law firm and form a new one, this will have retroactive date implications as well. Your new firm’s insurance policy may have a fairly recent retroactive date, and therefore would not cover any of your work from your previous firm. So what is to be done about past clients? What happens if a client from the old firm comes back with a claim against you? If these questions apply to you, start this conversation with your broker, and make sure the answers are satisfactory. If your broker doesn’t know how to deal with these situations, reach out to us for help.
The longer your legal career the greater your liability. Clients from decades back could show up with frivolous (or not frivolous) lawsuits at any time. Make sure your Professional Liability policy has the right retroactive date, and make sure you hold on to that retroactive date for as long as possible.
Self Insured Retention (SIR) vs. Deductible; First Dollar Defense
The main difference between Self Insured Retention (SIR) and a Deductible is who pays first. If you have a deductible in your policy, that means the immediate burden of payment is on the insurance company. In the event of a covered claim, they must pay defense costs, damages, and claim expenses up-front; then later they will bill you for your deductible. An SIR, on the other hand, puts the immediate burden of payment on your firm. The SIR must be paid completely, before the insurance company will pay anything.
Example: if you have a deductible of $15,000, then during your claim the insurance company will start covering expenses immediately, then later bill your firm for $15,000. If instead you have a Self Insured Retention of $15,000, then you will still need to incur those expenses up front, and only then will insurance begin paying expenses.
Many policies that contain a deductible will also contain a “First Dollar Defense” clause. This means the deductible only applies to damages, settlements, and judgments – NOT to claim expenses. This generally means that if your claim is resolved without a settlement or judgment, then you will not have to pay a deductible.
Make sure to ask your broker to explain whether your policy has a deductible, Self Insured Retention, or First Dollar Defense.
Who gets to choose defense counsel? What if I want to represent myself or pick my own defense?
The short answer is that it depends on your policy. Typically this is found in the “Defense of Claims” section of your Professional Liability insurance contract. Here “we” refers to the insurance company:
In this case the policy does not provide for selection of your own counsel, though it does make it clear that the carrier cannot settle on your behalf without your written consent. Not every Professional Liability policy is worded like this; the language can vary wildly policy to policy. If it is important that you have the right to appoint your own counsel, or you want a low Self Insured Retention, or you need insurance to cover you for work you did ten years ago, these items can all be negotiated with the insurance company at the client’s request. A good broker must advocate for his client, and seek the most favorable terms possible.
The Hammer Clause: will you be forced to settle when you don’t wish to?
A Hammer Clause is a provision that states that if the insurance carrier wants to settle your case, but you do not agree with the recommended figure, the insurer will not be liable for any additional money above what they already offered in their recommended settlement, should your refusal to settle lead to a higher judgement against you.
A strict Hammer Clause means the carrier really won’t pay anything beyond what they originally offered, whereas a more relaxed Hammer Clause might agree to pay 50% of additional damages after you refused the settlement.
Here is an example of a more relaxed Hammer Clause from a Professional Liability policy:
In this case the insurance company will pay the full settlement they initially offered, followed by 50% of any additional expenses above and beyond the settlement offer. Make sure your broker checks the Hammer Clause in your policy. This clause directly affects the options available to you in the event of a claim. If your broker has no idea what a Hammer Clause is, please reach out for a free break-down of what’s in your current policy.
How much Professional Liabilityinsurance does a lawyer need?
This is a relatively complex question that should be assessed on a case-by-case basis. Here are some general questions to ponder as you decide how much insurance to buy:
Consider the nature and extent of both your business and personal assets, both of which are potentially subject to collection in the event of a judgement against you. Your limit of liability should at least cover your assets.
What is the net worth of your average sized client? What is the value of the services you are providing to them? If you were to make a critical professional error on your largest account, what is the most money you (or your firm) might realistically be liable to pay? Make sure your insurance at least protects you from mistakes you might make on an average sized client, and at best protects you from mistakes on your largest.
Very low limits of liability in your policy, such as $100,000 per claim, can be swiftly depleted – with defense costs alone – before you even get to a settlement. Consider the cost of legal representation in your area.
“Of Counsel” status with another firm – am I covered?
Coverage will be determined by the specific policy language. Some less expensive policies will exclude such coverage explicitly. Here is an example of the language that would confer coverage while acting as “of counsel” with another firm:
Such language is most often found in the “definitions” section of your Professional Liability policy.
Switching Professional Liabilityinsurance with an ongoing or potential claim – what you need to know.
First, you must give your current Professional Liability insurer immediate notice of any evidence you have of a pending claim. Most policies will refuse to cover any pending claim if you wait more than 60 days to give notice:
If you are currently going through the claims process, most other insurance companies will request that you wait for the process to conclude before you switch to a new insurance contract. The amount of money spent during a claim on your behalf, as well as the nature of the claim both have a direct impact on the price and availability of Professional Liability insurance for your firm.
The danger of “miscellaneous” professional liability for lawyers.
Some lower quality Professional Liability insurance contracts called “miscellaneous” professional liability exist in the market and it’s important to be aware of why these products are inferior to lawyer-specific Professional Liability coverage.
Miscellaneous professional liability is meant to provide coverage for certain types of professionals who don’t fit into standard business classifications used by insurance companies. However law firms are a clearly defined business classification, so a law firm should never wind up with a “misc.” policy. Only a very inexperienced broker would offer one of these boilerplate policies to a law firm.
The main downside to these products are that they often lack definitions for important terms, and often come with broad exclusions that cancel out much of the coverage. For example they may include exclusions for “professional advice” or other general terms that are not defined in the contract. This creates a type of “gray area” in the policy, where the insurance company can define their terms after a claim in such a way as to facilitate denial of the claim. A law firm who thought they had insurance then learns that their carrier will not be covering their most recent claim, due to a vague exclusion in the policy that the broker never explained. Nobody who purchases insurance hopes to engage in a legal dispute with their insurance company or their broker: this is not the point of insurance. Clear and specific policy language in the law firm’s favor will prevent these sorts of nightmare scenarios, but a law firm isn’t likely to find that kind of favorable language in a “misc.” policy.
Here is an example of such a gray area in a “miscellaneous” professional liability policy for an industrial designer who specializes in designing wearable electronics for Silicon Valley tech companies:
In this case, the terms “architect” and “engineer” are not defined anywhere in the contract! What is to stop the insurance carrier from simply alleging that this firm’s “industrial design” work is either “architecture” or “engineering”, and use that interpretation to deny a large claim? It goes without saying that this is bad insurance. A carrier should never be allowed this kind of vague wiggle room in a contract.
A “misc.” policy can cause just as much mischief for a law firm just as it can for an industrial designer. If the policy uses vague language to exclude various facets of a law firm’s operations, the law firm is basically paying a premium for a junk policy.
If your firm has a miscellaneous professional liability policy, reach out for a free synopsis of your current coverage (or lack thereof).
Other Types of Insurance a Law Firm should Consider:
Cyber Liability – for those that work with Personally Identifiable Information (PII); Trade Secrets or Intellectual Property (IP).
Cyber liability coverage covers the legal and regulatory expense of a computer breach that causes your firm to lose clients’ sensitive data. This is especially important if you work with PII, Trade Secrets or IP.
Employer Practices Liability – for firms with employees.
This covers any allegations of wrongful conduct as an employer, including harassment, wrongful termination, failure to promote, discrimination and more. If you have employees this is a coverage worth considering.
General Liability – for firms that see clients in personor keep a rented office.
This covers bodily injury and property damage for which the firm is liable. It is usually required by the firm’s commercial landlord, and otherwise only worth considering for an office with a decent amount of foot traffic.
In Conclusion: Make Sure your Broker is a Professional LiabilitySpecialist
An insurance broker who specializes in Lawyers Professional Liability provides two main services:
Reading the insurance contract language very carefully and explaining all provisions and exclusions to the firm in a concise and focused manner. This ensures that the firm will be aware of what is covered and what is not, so that they can make informed decisions.
Shopping around for new Professional Liability quotes every year, to make sure the firm is always getting the best possible deal when it comes to both price and coverage. The marketplace for Lawyers Professional Liability is dynamic and ever changing. We shop our clients every year and share the results with them, so they can be confident they are getting the best price and service available.
If you are a new law firm seeking insurance advice, we are happy to share our expertise. If you are an established law firm, but you get the impression your broker isn’t a specialist in Lawyers Professional Liability ; or if he offers you the same policy year after year while the price steadily rises, showing no evidence of a shop-out; or every time you call with a question you get routed to a customer service representative who doesn’t know the details of your policy – give us a call so you can get the service you deserve.
How to Insure a Damaged Building and/or a Building with Claims.
Is My Building Uninsurable??
It can be a frustrating experience to hear that your building is “uninsurable”. Oftentimes when a building has some unrepaired damage, a history of claims, or some other problem, many insurance professionals will simply shrug and say, “Sorry your building is probably uninsurable”. If you ever hear this, it usually means that that insurance professional actually doesn’t know how insure such a building. No building is uninsurable.
There are thousands of insurance companies in the US. For every possible type of property, there is an insurance company (or several) that specialize in insuring it. It is crucial to work with a knowledgeable broker who not only knows which carriers will insure damaged buildings, but also which coverage need to be added to the policy to fully protect you, the owner. This article will dive into how to properly insure a damaged building and/or a building with claims.
Insuring a Damaged Building
When a fire burns a portion of a home, or a burst pipe floods a couple floors of an apartment building, a common insurance scenario plays out. The owner files a claim with his/her insurance company, and that carrier pays the claim to cover the repairs. But then, upon renewal, the carrier cancels the policy and tells the owner to find insurance elsewhere. This can happen even while the building is still being repaired, or even before repairs have begun. The previous carrier may still be paying to repair the property, but meanwhile the building owner needs to seek new insurance for the now damaged property, in order to cover the property going forward.
Why does this happen? Insurance companies exist to make a profit, and when there is a claim they lose money. Insurance companies do not want to insure unprofitable clients. This is the basic rule that governs what an insurance company is willing to insure.
Simply put, when your insurance company starts losing money, your insurance coverage is in danger. It could be cancelled or non-renewed anytime at their request with only 30 days notice. This not only means that you need to shop for insurance again – it means that insurance has become much harder to find, because your building is damaged, and your claims history follows you.
Damaged buildings need insurance during the repair process. Vandalism, water damage, and fire damage are all real concerns while a building is being repaired. There are also other risks to consider when contractors and construction people are coming in and out of your building every day during the repair. Due to the increased risks of insuring a damaged building or a building under construction, many standard
“admitted carriers”
will likely decline to quote.
However there is a whole galaxy of options outside of the admitted market. These carriers specialize in insuring buildings that, for one reason or another, have been rejected (or priced out) of the admitted market. This includes damaged buildings, buildings with a history of claims, buildings under construction, and other unique situations.
Not every insurance professional knows how to access this portion of the insurance market. In fact, many insurance pros ONLY know how to shop the admitted market (or only have access to one single carrier); when those limited options offer only declines, that insurance pro waves the white flag. This can lead a building owner to (incorrectly) believe that their property needs to remain uninsured for the unforeseeable future.
Here at Mighty Oak, we know how to deal with these situations properly. We have relationships across the
admitted AND the non-admitted markets
, so we are able to provide quotes to any property owner who needs insurance, even those with damaged buildings.
We also have the experience to know which coverage must be added to a damaged building’s insurance policy in order to fully protect the owner. For example, a policy for a building under construction should probably include a coverage such as
Builder’s Risk
, while a policy for a vacant building needs to have the Vacant Property Exclusion removed prior to putting the policy in force. These (and other details) are what we look for when we help an owner of a damaged building acquire insurance.
What if your building isn’t damaged at all, but instead just has a long history of claims?
Earlier this year a homeowner contacted us with a predicament: her homeowner’s insurance had been cancelled after she filed one too many claims. Her house was in pristine condition, worth more than $2 million, yet it seemed like nobody could get her a homeowner’s insurance quote. Her claims history had made her “uninsurable” (or at least that’s what she feared).
For over ten years she had been with a standard carrier, just like all her neighbors. But one day a storm damaged her windows and caused a leak, so she filed a claim. The insurance company paid for the repairs. Soon after that, a tree fell on her fence – which meant another claim and another pay-out by the carrier. Finally a couple months after that, the neighbor’s landscape contractor backed over their lawn irrigation equipment and broke the sprinkler system. This claim cost the carrier another $5,000. Their insurance company canceled her policy about a month later, and their agent had no options to replace it.
When she visited another broker, he checked with all the standard, admitted carriers, and received nothing but declines. Why? Because with every carrier he checked, he was required to explain her claims history. When these carriers heard about the claims, they refused to take on the risk.
None of these these claims were catastrophic, and none were wildly expensive. All were reasonable claims that any insurance company should expect to pay for. Yet just the fact that there were three claims in one year was enough for the client to be shut out of the standard market, even though her house was in excellent condition. When her broker received nothing but declines, he told her she may be uninsurable.
Of course, he was wrong; she was very much insurable. When she was referred to us by a friend, we performed a diligent search of carriers that are willing to take on clients with a history of claims. We found her some quotes that fully insured her property, and she is now insured once more.
Our brokerage specializes in helping owners of “distressed” properties, whether that means buildings under construction, damaged building, or buildings with a history of claims. We can even find insurance for buildings where damage has yet to be repaired. There is a carrier for every situation; no client is uninsurable. We will put our deep knowledge of the insurance market to work for any client that needs insurance, especially those who have been turned away by other brokers.
For business owners, general contractors, hotels, manufacturers, restaurants, cleaning services, and any other type of business that interacts every day with clients, General Liability is one of the most crucial types of business insurance.
If a person is injured as a result of your business operations, this insurance can help cover the medical bills, legal fees, and settlements. If property is damaged and your business is legally liable, a General Liability Policy can pay for the repairs and replacement property. Just about every type of business needs a liability policy for the basic protection it provides.
Accidents can happen any time – it’s a part of life – and often these accidents lead to lawsuits. A ladder damages a window, a customer slips on a wet floor, an undercooked burger leads to food poisoning, a toolbox falls from the roof onto a car; in these and other mishaps, a General Liability Policy will act as lawsuit protection. If anyone or anything is harmed from your products, property, services, or operations, this policy might mean the difference between keeping your business open and shuttering it forever.
Property Insurance
Commercial Property Insurance protects a business owner’s valuable assets from fire, theft, explosions, extreme weather, burst pipes, vandalism, and more. This type of insurance can be tailored to fit any type of business, since it can cover buildings, computers, tools, equipment, important documents, inventory, furniture, and even the signs, fences, and landscaping just outside your building.
For business owners who rent a space, this policy will cover only their belongings without covering the building itself (which is the landlord’s job). It can be tailored to protect a few small items (like a computer and some furniture) or large, expensive equipment. For building owners, this policy can cover the building and contents, and even lost rental income.
Nobody can predict when a disaster will strike, but as a business owner you can prepare for it. With a Commercial Property Policy in place, your valuable property (and your livelihood) are protected, even if the unexpected happens.
Landlords Insurance Policy
If you own a building and rent it out, that building is your business. So it should be insured like a business. Whether it’s a commercial building or an apartment building, and whether you rent out just one unit or 100, that precious asset needs to be protected (and you do too).
A well-crafted Landlords Policy will first and foremost cover the property itself. If any part of the building (including the siding, roof, foundation, glass, awnings, garage, railings, etc.) is damaged, this policy should pay the owner to cover the repairs. This policy can also cover loss or theft of the landlord’s items, including janitorial supplies, paint/touch-up supplies, art, and decorations in the lobby. If the building is damaged and the tenants have to move out for a time, this policy can even cover the landlord’s lost income while tenants aren’t paying rent.
Aside from the property, this policy also provides liability coverage for the landlord. This means if someone trips and falls on the stairs and decides to sue the building owner, this policy can cover legal fees, damages, settlements, and medical bills. If a tenant sues for wrongful eviction or invasion of privacy, this policy might help the landlord cover those legal bills as well.
This policy treats a landlord’s property like the business that it is. It protects the actual building, the rental income, and the landlord’s livelihood in the event of a lawsuit. It’s an insurance policy that is tailored to a landlord’s specific needs.
Builder's Risk Insurance
If your property is undergoing a significant remodel, or if you are building from the ground up, or if your building has been damaged and needs to be reconstructed, you may want to consider Builder's Risk Insurance. This type of coverage protects buildings while they are under construction, as well as materials, fixtures, and/or equipment used during the construction or renovation of a building. If this property is damaged or stolen, Builder's Risk can pay to replace it, and keep your construction project running smoothly. Buildings under construction tend to be more susceptible to theft, vandalism, fire, and extreme weather. Sleep easy at night knowing that your investment is protected from hazards you can't prevent.
If you make a living off of providing expert advice, Professional Liability (also known as Malpractice and Errors & Omissions) should be a serious consideration. This insurance protects you and your business from lawsuits alleging that you made an error. This is a crucial coverage for all kinds of expert professionals, including doctors, CPAs, lawyers, engineers, insurance agents, architects, IT consultants, and certain contractors. As an expert, you rely on your deep training and knowledge to advise and serve your clients. But everybody makes mistakes; if a client ever accuses you of negligence, dispensing bad advice, malpractice, or an error on a critical document, an expensive lawsuit may soon follow. Professional Liability can protect your finances and your business from hefty legal fees. Nobody is perfect. You may never plan to make a costly mistake, but it's wise to be covered just in case. And by the way, Professional Liability will even pay for your defense if the lawsuit is frivolous.
For retail businesses, general contractors, hotels, manufacturers, restaurants, cleaning services, and any other type of business that interacts every day with clients, General Liability is one of the most crucial types of business insurance. If a person is injured as a result of your business operations, this insurance can help cover the medical bills and legal fees. If property is damaged and your business is legally liable, a General Liability (G.L) policy can pay for the repairs and replacement property. Just about every type of business needs a G.L. for the basic protection it provides. Accidents can happen any time - it's a part of life - and often these accidents lead to lawsuits. A ladder damages a window, a customer slips on a wet floor, an undercooked burger leads to food poisoning, a toolbox falls from the roof onto a car; in these and other mishaps, a G.L. policy will act as lawsuit protection, covering defense costs and even damages. If anyone or anything is harmed from your products, property, services, or operations, a G.L. might mean the difference between keeping your business open and shuttering it forever.
"Admitted" insurance policies are those sold by companies that have been licensed by the state where the insured's business operates. These admitted carriers are subject to regulations by that state, which means they tend to be more conservative in their underwriting. In the real world, this means that admitted carriers tend to offer insurance only to businesses that have a lower likelihood of filing large claims. These low risk businesses might include offices, clothing stores, small restaurants, tech start-ups, and other similar businesses. Admitted carriers are also backed up by the state's insurance guaranty fund, which means if that carrier goes bankrupt the fund will step in and pay out claims. Overall, admitted insurance is considered to be ideal due to the state support, low cost, and extra coverage that tend to come along with admitted policies. However, businesses with more risk of filing large claims are usually unable to acquire admitted policies due to the strict underwriting guidelines.
Larger business, or those with higher risk of filing large claims (such as construction companies, roofers, manufacturing operations, farms, and damaged properties or properties with a history of claims) tend to get immediately declined by admitted carriers. Therefore they have to get their insurance from "non-admitted" carriers. This simply means that the carrier is not licensed by the state. They may be licensed in another state, or even another country (such as Lloyd's of London). Since they are licensed elsewhere, they do not need to comply with the strict state insurance regulations. Therefore these carriers are free to take on higher-risk businesses. These carriers are also not supported by the state insurance guaranty fund. If a non-admitted carrier goes bankrupt there will be no bailout. While this seems risky on the surface, there are other ways to check the financial reliability of a carrier, such as the AM Best score, which rates carriers from A++ to F. Many non-admitted carriers are rated A- (Excellent) and higher, which means they have are considered financially stable. For businesses with more risk or claims, non-admitted carriers are often their only option for acquiring business insurance. There is a vibrant market for non-admitted (also known as "surplus lines") insurance, and lots of options available for business owners.
