DO YOU NEED EXCESS INSURANCE?

All insured lawyers in the province of Newfoundland and Labrador have mandatory insurance coverage of $1 million per claim with an aggregate limit of $2 million.

You might consider these limits of insurance when you decide whether or not this is enough coverage for your practice. You can purchase excess insurance that covers you for claims that might arise after your $1 million limit and $2 million aggregate have been exhausted.

It’s always difficult to decide how much insurance you should have in place. Here are some of the things that lawyers and law firms might take into consideration when deciding whether or not to purchase excess insurance.

1. Client requires it
   Many lawyers tell us that their clients require proof of excess insurance. Lenders may require insurance at a level that matches a loan advance. Some government agencies or large corporations may require proof of a minimum level of insurance that is higher than the mandatory $1 million as a condition of the retainer.
2. Area of practice
   Some areas of law consistently result in more frequent claims. For instance, real estate files account for the highest number of claims by volume, but these are usually less costly per claim. Missed limitations on medical malpractice or personal injury files tend to be more severe. When you are deciding whether to purchase excess insurance and in what amount, consider whether your practice and that of your partners and associates falls into areas of law that are high risk for frequent claims or high risk for severity.
3. Dollar value of files
   You should also assess the potential quantum of damages arising out of potential claims. Valuable estates, commercial transactions and family law files where the value of assets at issue is high all have the potential to develop into large claims. Personal injury, including medical malpractice, has potentially high value if limitations are missed or claims are dismissed for delay. If you and your firm seldom deal with matters where more than $500,000 is at issue, you may not feel such a pressing need.
4. Defence expenses
   You should also remember that it is not only the indemnity or damage payment which might ultimately erode the limits of your insurance. Defence costs eat into your coverage limits. There have been claims in Canada where costs incurred in defending lawyers in complex legal malpractice suits have exceeded $1 million.

The decision is yours.

You are the only one who can assess your firm’s exposure to a claim or series of claims that might take you over the mandatory $1 million limit or the annual $2 million aggregate limit. Take some time and consider your exposure today.

Your insurer, the Canadian Lawyers Insurance Association (CLIA) offers excess coverage in amounts from $1 million to $9 million in excess of the $1 million mandatory insurance.

The annual premium rate structure per lawyer is as follows:

$1 million per occurrence/and aggregate = annual premium of $360

$2 million per occurrence/and aggregate = annual premium of $529

$3 million per occurrence/and aggregate = annual premium of $618

$4 million per occurrence/and aggregate = annual premium of $655

$9 million per occurrence/and aggregate = annual premium of $917

The new policy period starts July 1, 2017

If you are interested in purchasing excess insurance, you may contact Janice Ringrose, Insurance Administrator, at 726-6008, email at insurance@lawsociety.nf.ca or complete an application for excess insurance at http://www.clia.ca/eng/docenglish/VepApplications/NL-2017-18.pdf