Your Los Angeles Lawyers Professional Liability insurance claim is dragging along. Suddenly, your Errors and Omissions Liability insurance company lowers the boom…
– or in this case the hammer – by advising you to settle for the amount they tell you to settle for, or pay the difference out of your own pocket. If you did not fully grasp the terms of the Los Angeles Lawyers Professional Liability insurance you were buying, this can come as a shock. The claim against you is without merit and you want to push on defending it – but at what cost to you financially?
Your Los Angeles Lawyers’ Professional Liability insurance carrier wants to settle this claim against you for $100,000. They perceive it as a “nuisance claim” but to keep defending the claim with the hope of winning is going to incur $75,000 in defense costs. To save them the expense of a trial they advise you to settle for $100,000 which the plaintiff advised he will accept. Your reputation is at stake, maybe even your continued employment with your firm so the decision is made to go to trial and let the pieces fall where they may. Juries are a fickle commodity. You just cannot tell which way they will decide. In your case, they decide with the plaintiff and award $300,000 in damages against you. Under a full hammer clause, you are responsible for all costs in excess of the initial $100,000 payment the insurance company could have settled for. This was not exactly the outcome you were hoping for and this can be financially devastating to your law firm. A full hammer clause can not only affect the lawyers’ wallet but can impair their reputation as well, by forcing them to agree to a settlement they might not have otherwise agreed to.
There are Los Angeles Lawyers Professional Liability insurance policies available that do not have a hammer clause. These are limited to law firms that qualify for this product based on the total number of attorneys on staff, the firm’s claims and general experience over all as well as the ability to produce strong current financials.
Some Los Angeles Lawyers Professional Liability insurers negotiate to “soften” the hammer clause and as your agent, we will negotiate that on your behalf. The clause can be amended to 80/20 or 70/30 dependent upon the company that is providing the coverage and the overall past performance of the law firm being insured.
Another negotiating tool that our agents investigate when preparing quotations for Lawyers Professional liability insurance is the use of deductible reduction incentives. There are several and you can choose one or all of them:
- Agreeing to report any incident to the insurance company before it becomes a full blown claim
- Settlement of a claim based on the advice of the insurer
- A mediation or arbitration clause in your contract for services
A higher deductible or self-insured retention will lower your annual premium. You might want to opt for the higher deductible but incorporate the deductible retention incentives as well.
There are options for you when you are purchasing this Professional Liability insurance and we can discuss all of them with you. Contact Maker Technique Insurance Agency today.