What is step rating and how does it affect my legal malpractice premium?
Simply put, step rating actually causes your premium to increase. Why? Because each step is equivalent to an additional step or an additional year of exposure.
When you’re a new lawyer, or you’re just opening up your firm, you’re down on the lowest level, or the lowest step because you don’t have anything or any ghosts or skeletons in your closet that the carrier is concerned about.
But each year as you practice, you go up each step. And again, the more steps, the more exposure. The more exposure, the more premium the carrier is going to charge.
So simply put, step rating causes your premium to increase.
When you purchase professional liability insurance, most of the time, you’ll see what’s known as a retroactive date listed somewhere on your declarations page of the policy. This retro date actually refers to the date that the coverage will go back to, to cover you for your professional services.
If you are an older professional, like me who has been around for the last 30 years, you might have a retro date of 1/1/1989. Or if you’re a new professional, like my daughter, you might have a retro date of 1/1/2015.
Again, just remember, it’s the date that the policy will refer to or go back to cover you for the professional services you perform for your clients.