Lawyers carry considerable risks from major professional liability claims and potentially devastating property losses at their offices. If you’re a lawyer, liability insurance and commercial property insurance are essential.
Let’s look at these key lines of insurance and others you may need to secure.
Professional liability insurance
Professional liability insurance, or errors and omissions (E&O) insurance, is essential for lawyers. It covers claims arising from errors, omissions or negligence (proven or perceived) in your professional duties. It not only protects your financial assets, but also ensures that your clients have recourse to compensation if they suffer damages due to your negligence. This creates a foundation of trust and accountability in the legal system.
Alberta has its own law society that mandates liability insurance as a condition of practising law. These insurance policies typically cover the costs of legal defense and settlements or judgments, subject to policy limits. However, criminal acts, intentional misconduct and certain other exclusions generally fall outside the scope of coverage. Below is a summary of key requirements across major jurisdictions.
Alberta insurance for lawyers
The Law Society of Alberta has a mandatory indemnity program for Alberta lawyers, managed by the Alberta Lawyers Indemnity Association. This is a group policy, also with a $1 million occurrence and $2 milliona ggregate limit. It has two areas of coverage:
Part A (professional liability)
Part B (misappropriation)
Excess liability insurance
You may also want to purchase excess liability insurance to cover claims that exceed the policy limits in your primary liability coverage. This is a popular move among practising lawyers, as complex or high-value cases can lead to significant financial exposure.
Cyber liability insurance
Lawyers manage a lot of personal information, which exposes them to data breaches and cyberattacks. Cyber liability insurance helps cover the costs of legal fees, notification expenses, and fines resulting from a breach of laws, like the Personal Information Protection and Electronic Documents Act.
Employment practices liability insurance
Law firms of all sizes, including lawyers in sole practice who employ a small staff, should consider employment practices liability insurance (EPLI). While your intent may be to treat everyone with the highest degree of propriety, a potential hire, current employee or person you are terminating may feel wronged. Lawsuits over discrimination or hostile workplaces can cost a fortune and damage your reputation. EPLI covers legal costs and settlements or judgments. And it often comes with coverage for media relations and reputation management.
Comprehensive coverage for your law firm
If you own your offices or have a lease that requires you to insure your rented premises, you will need some property insurance. You may also need commercial auto insurance if you have company vehicles or your employees use their own vehicles for business.
Commercial property insurance: This protects your law firm’s physical assets from risks like floods, fires, theft, vandalism and natural disasters. It covers buildings, furniture, equipment and supplies.
Commercial general liability insurance: This covers visitors’ claims of bodily injury or property damage arising from incidents that occur on your property. For instance, if a client is injured after a slip-and-fall at your office, this coverage can help cover the legal and medical costs associated with the claim.
Commercial auto insurance: You need this insurance if you use your vehicle or a company vehicle for business purposes, including client visits and court travel. It protects you against accidents, property damage and liability claims that occur while you’re driving for work.
Workers’ compensation insurance: Workers’ compensation is a legal requirement in most provinces. It covers medical expenses, lost wages and rehabilitation costs if an employee is injured on the job. For specific rules and premium calculations, you or your broker can contact the Alberta Workers’ Compensation Board.
Insurance is a vital aspect of a lawyer’s professional and business life in Canada, offering protection against risks that could otherwise jeopardize your career and reputation. An insurance broker familiar with the needs of lawyers can find options to protect your firm from financial devastation if you experience a major property loss or claim.
