Material Change
Key Takeaway
A significant alteration in the insured's risk profile that may require notification to the carrier or trigger policy adjustments. For law firms, material changes include adding new practice areas, merging with another firm, hiring lateral partners with claims history, or substantially increasing revenue.
Definition
A significant alteration in the insured's risk profile that may require notification to the carrier or trigger policy adjustments. For law firms, material changes include adding new practice areas, merging with another firm, hiring lateral partners with claims history, or substantially increasing revenue. Failure to disclose material changes can jeopardize coverage.
Why This Matters for Law Firms
Underwriting terms determine what you pay for coverage and what terms you receive. Law firms that understand the underwriting process can present their risk profile more effectively, negotiate better terms, and avoid surprises at renewal. This knowledge is particularly valuable when shopping for new coverage or responding to carrier questions.
Example Usage in Context
A firm preparing for its annual insurance renewal might encounter this in the carrier's proposal: "The underwriter has adjusted our material change based on our claims history. Let's discuss with our broker whether we can improve this at our next renewal."
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