What does legal malpractice insurance cover?

Legal malpractice insurance, also known as lawyers professional liability insurance, provides financial protection when a client alleges that your legal services caused them harm. The policy typically covers three core areas: defense costs incurred in responding to a malpractice claim, settlements negotiated on your behalf, and judgments awarded against you by a court.

The scope of covered acts generally includes errors in legal advice, missed deadlines such as statutes of limitations, drafting mistakes in contracts or pleadings, conflicts of interest, failure to know or apply the correct law, and inadequate discovery or investigation. Most policies also extend coverage to claims arising from notary services performed in connection with your legal practice.

It is important to understand what malpractice insurance does not cover. Intentional or criminal acts, business disputes unrelated to legal services, bodily injury or property damage claims, and fee disputes are typically excluded. If you serve on a corporate board or provide financial planning advice outside the scope of your law license, those activities usually require separate coverage.

Many attorneys are surprised to learn that malpractice policies also respond to frivolous claims. Even when you have done nothing wrong, defending against a baseless malpractice lawsuit can cost tens of thousands of dollars. Your policy covers those defense costs, which is one of the most valuable features of the coverage. Some policies also extend to cover disciplinary proceedings before the state bar, though this varies by carrier.

The policy limits you select determine the maximum the insurer will pay per claim and in aggregate during the policy period. Choosing appropriate limits requires evaluating your practice areas, client types, and the potential severity of a claim. Real estate, securities, and plaintiff personal injury practices tend to carry higher risk profiles and may warrant higher limits.