What Is A Step Rating?

The most common question I get as an insurance broker from new lawyers or new law firms is why did my premium on my professional liability insurance increase especially when we haven’t had any change at all in our areas of practice? And probably more important, we haven’t had any claims, but yet my premium goes up by 20%? What’s the deal? How did that happen? 

Well, the simple answer to that question is, step rating.  Step rating is really nothing more than the carrier’s attempt to price your increased exposure as you practice year to year. 

As an example, the very first year that you, the lawyer, purchase a professional liability policy is probably going to be the least amount that you ever pay for professional liability insurance. The reason for that? You have no baggage, the carrier is basically covering you from the effective date of your policy, day one, going forward, there’s nothing in your past that actually is going to impact the premium, or gives the carrier concern that there might be a claim out there waiting to happen. 

Your first renewal, the carrier not only is going to price it for everything that you’ve done in the past, you know, which is one year, however, they also have to price it for what you’re going to do for the next 12 months. Therefore, their exposure basically doubles. Therefore, they have to increase your premium to capture that risk. 

The same holds true for the third year, not only is the carrier going to insure you for everything that you’re going to do for the third year, but they’re also insuring you for everything that you did in year two and year one. Basically, their exposure is tripling – they have to capture that risk by again, increasing your premium. 

The good news behind step rating is that there is a cap to it. It’s not going to increase your premium for the next 30, 40 years. Depending on the carrier, step rating could cap at five years, could cap at six years, could cap at seven years. Again, it depends on the carrier that you’re insured with. But again, the good news is that it does cap, it doesn’t continue on and on and on. 

What To Expect When Applying For Life Insurance

Most people think obtaining life insurance is a long and arduous process. It isn’t! At INF, we really try to make the process as simple and easy as possible. 

We start by completing an indication sheet. You’ll sit down or talk on the phone with either myself, Don Ivol, or Mark Schnelzer and we’ll ask you a few simple questions such as your name, your address, height, weight and gender. We’ll also ask just a couple of questions with regards to your health history. 

At that point, we use the information that you provided and we send it to our managing general agent who has access to 20-25 different insurance carriers. These carriers will look at the information that you provided and come back with a preliminary pricing report. Then, we’ll get back in touch with you and review the available amounts and pricing. 

From there, you can make your decision based upon the amounts, the carrier, and the pricing. At that point, things become a little bit more detailed and there will be a life insurance application that’s required. 

We will always be at your side to walk you through the process, help you answer those questions and get the information to the carrier to verify the original pricing and the coverage terms. So don’t put off applying for life insurance because you think the process is too difficult.

What Does Liquor Liability Insurance Cover?

Happy Holidays and  Tis the season for Family, decorations, cookies, gifts and the office party!  Especially this year since most if not all of our offices were closed last year due to the pandemic. 

If an office party is on your calendar enjoy it and have a great time but as my mom always told me be careful and watch what you drink.  Especially if you are the owner of the business. 

Not only do you have to watch yourself, but you have to watch what your guests are drinking.  It is easy to over indulge at any parties but it seems like it is easier to do so at the office Christmas/Holiday Party and as you know accidents do happen.

So if you’re planning a holiday party and are going to be serving alcohol, consider the purchase of what is known as host liquor liability coverage.  It can provide you protection in those situations when an over-served guest at your party is involved in some sort of accident, causes harm to someone and that someone looks to you for damages.  

I’m not trying to be a holiday grinch here – just trying to help you be prepared for the unexpected and keep those holidays happy!  Enjoy your office party and have a wonderful holiday season! 

If you have any questions about liquor liability insurance, or any other type of insurance, call us at 412-563-2106.

Be Sure To Report Claims In A Timely Fashion

Legal malpractice claim

No one likes to report a legal malpractice claim to their carrier. It reminds us that we made a mistake or that very difficult client that is impossible to satisfy.

To make matters worse, legal malpractice policies demand that we also report any potential claims, not just actual claims, but those issues that may develop into an actual claim.

All claims, whether actual claims or potential claims must be reported to the carrier as soon as you become aware of them. Don’t delay this process. Slow reporting to the carrier can and will cost you money in that the carrier can simply deny your claim because the claim wasn’t timely reported. Proper notice must be given to the carrier.

A good tip is to review your policy and make sure you’re familiar with the reporting process. Making that call or writing that letter may be painful and dredge up a few bad memories or two, but it will provide a level of comfort knowing that the report was made and the denial of coverage is not in the cards for late reporting.

What Insurance Is Needed When Starting A Small Business?

I’m starting a small business. What insurance do I need? 

When starting a small business, most of the time, money is pretty tight and price is a major consideration when deciding to buy anything. Usually, and unfortunately, insurance is pretty much always close to the bottom of the list. 

At a bare minimum, you do need to consider the purchase of any insurances that are mandated or required by the state that you’re in, and the industry that you’re practicing in. 

In my opinion, the most common required insurance in Pennsylvania is workers compensation. If you have employees, you need a workers compensation policy to cover them in the event that they are injured on the job. You should have this in place on the day you open up shop. 

Next, you should think about protecting yourself and the assets of your business. This can usually be accomplished with the purchase of a business owners package, which would include general liability coverage and coverage on the business personal property. 

General Liability protects you against negligence claims, and the business personal property actually protects the property of the business. Depending on the amount in your specific industry, these small business packages can be purchased starting at $500. 

Again, a lot goes into pricing and the pricing will vary. There are several other coverages that you need to consider and review, such as employee benefits, health insurance, professional liability insurance, cyber insurance, bonds, and crime policies, just to name a few.

But if you’re just starting out, you need to make sure you address the first three items that we talked about – workers compensation and a small business owners package which protects in general liability, and business personal property.

What Is An ERP?

In the world of professional liability insurance, ERP stands for an extended reporting provision.

This usually comes in the form of an endorsement, and it usually occurs in a few situations:

  1. In the event of your death
  2. In the event of your retirement
  3. Your entity dissolves

With a claims made policy, you need this extended reporting period provision to be issued, so your prior acts or your past professional services are covered under the last policy that you purchased.

How Is My Legal Malpractice Insurance Premium Price Determined?

When underwriters look at a risk, there are several factors that come into play in the pricing portion of the process.

A couple of the major driving factors or driving forces are:

  • How long have you actually carried insurance?
  • How long have you actually been practicing law?
  • What type of law do you practice?
  • What areas do you play in?
  • Have you ever had a legal malpractice claim?
  • Do you really care about risk management?
  • What kind of risk management techniques do you have in place in your office?

These are all things that an underwriter will look at that will either cause your premium to go up or cause your premium to go down.

New Insurance Type at INF for Small Groups

Usually I write about lawyers, legal malpractice insurance policies, coverage pricing, and some risk management ideas. But in this article, I want to talk to you about a different kind of coverage. 

As a matter of fact, it’s a coverage I just recently purchased for my office. It’s commonly referred to as small group benefits. This is a benefits package that protects the office with life insurance and disability insurance for the employees. There are a number of different benefits that can qualify under this small benefits insurance package including long term disability, short term disability, accident insurance, vision insurance, and dental insurance. 

The reason why this is an important topic is because usually, when you think about group insurance, you think about insurance for larger groups. This was true years ago when you couldn’t get a group policy if you had less than 10 employees. So this coverage was really pretty much exclusive for groups larger than 10 people… but not anymore. Now, if you have a group of two or more people, you’re eligible for the benefits. 

There are several different, what I call, beauties in the package and one of them happens to be guaranteed acceptance. This means that for you and your employees, you don’t have to worry about completing a health insurance application or worry about your past health as your acceptance is guaranteed up to a certain maximum benefit limit. 

The other beautiful thing about this is that all of your full time employees are eligible for it. So they’re not going to pick and choose, okay, we can only have these two people or these three people or this one person – no, all of your full time employees are actually eligible for the program. 

The other item that I want to bring up is that it is a high-tech administration where everything is pretty much done online. Your employees will have access to a portal that they can go on where they can see what their life insurance benefit is, what their disability benefit is, what their vision coverage is. It’s all online, it’s all done with a snap of a finger for  your employees. This is a great thing. 

The other nice thing from an employer perspective is that you can actually pay the premium online on a monthly basis. That’s what I like about it – I didn’t have to come up and stroke a check for $1,000 for the year or 2500 bucks for the year.

Whatever that premium is, you can actually pay for it monthly, making it very affordable. It’s a great benefit, your employees will really appreciate it and if you’re an old person like me, you’ll enjoy it because you know that the premiums will be a little bit less than what I think you’re used to seeing when it comes to life and disability.

If you’re interested or have any questions with regards to the program, shoot me an email or give me, Don Ivol, a call at 412-563-2106.

How Does A Hammer Clause Work?

What is a hammer clause in a legal malpractice insurance policy?

It’s a great question that I get asked a lot. Simply put, a hammer clause in a legal malpractice policy is the carrier’s ability to force you to settle a claim that you really don’t want to settle.

How does the carrier do this?

The carrier basically just says, look, we can settle this claim for X number of dollars. You say, well, no, I don’t want to settle it for X number of dollars. And the carrier says, okay, we won’t settle it, we’ll keep fighting it, but if the end result is a settlement larger than what we could have settled it for back here, you’re responsible for the difference. You’re on the hook.

Are You Looking to Lower Your Legal Malpractice Insurance Premium?

Are you looking for ways to lower your legal malpractice insurance premiums and help turn prospects into firm clients?  Look no further than your firm’s website and online presence.  

Insurance carriers now review your firm’s website in an effort to try and get a better picture of you. They are looking at the site content describing your areas of practice, the type and size of your clients, risk management procedures, articles in the firm newsletter, blog, your Google My Business profile and social media feeds. 

They are trying to determine if your law firm’s site conforms with the ABA and or state bar association rules and guidelines on advertising and e-platforms.  What the underwriter sees and interprets from your site will impact on how he or she views the exposure your firm creates and will influence the pricing up or down.

One of the content items that seems to regularly raise a red flag is the listing of the firm’s practice areas on the site.  Firms will often boast several areas of practice on the site, some of which they haven’t had a case in that area for years. 

I realize that it may seem like a good idea to list as many areas as possible to try and draw in clients. I have even spoken to firms that have told me that they want the web site to project the firm as having that “large firm” appeal or sophistication impact. 

From an underwriting and pricing standpoint, know that it can have a negative impact.  Especially if several of the areas of practice are considered higher risk areas such as: Oil and Gas, Securities, Intellectual Property (copyright patent trademark), Class Action and some Employment law.

Additionally, from a marketing standpoint, listing areas of practice that you do not typically deal in can have negative effects on your search engine optimization as well.  Google wants to know what your firm does well and they want to show your website to people searching for that skill. 

When you list many areas of practice and don’t have a concentration on a particular niche, your website is less likely to show up in the organic search results for what you do best! 

Please know, I am not trying to tell you how to advertise or practice.  That obviously is up to you. I am telling you that you should be as accurate as you can with the content on your website, Google My Business listing and social media profiles. 

Know that people other than prospects are looking at your website including insurance carriers and even your competition.  Keep your online presence updated, relevant and interactive.

It will give the insurance carriers an accurate picture of your firm, coordinate and confirm the information you list on the malpractice application and help drive the type of prospects to your website the firm wants to have as new clients.