PHIL’S CORNER: Completing the Firm’s Insurance Needs
Phil’s Corner is a special column from OAMIC’s President & CEO Phil Fraim that is sent in our e-newsletter each month.
No big surprise that professional liability insurance is the biggest need for law firms, since it represents the largest exposure for lawyers, as well as other professions like doctors, accountants and architects. For that reason, we will never take our eye off the goal of being the very best professional liability insurer for the Oklahoma legal community.
Any business, including professional groups, has other needs with respect to property and casualty insurance though. If you don’t own your office building, property insurance is not as critical, but there is still a big need. You should consider the tangible assets within the firm, i.e., furniture, fixtures, leasehold improvements, computers, etc. These assets need to be protected! There are also ancillary property-related coverages that you can have included in coverage, such as valuable papers, accounts receivable, loss of income, forgery and employee dishonesty.
General liability is a lower risk in the typical office setting. However, banks, landlords and property management companies may demand proof of general liability coverage as a condition of a lease. From the firm’s standpoint, it is a very inexpensive coverage commensurate with the perceived low exposure. It will, or definitely should, include non-firm-owned auto liability insurance. Anyone driving on the firm’s behalf exposes the firm. If the firm staff person is at fault in an auto accident, even in their personal vehicle, the firm can also be named in a claim or lawsuit. Anything in excess of the individual’s personal auto limit could fall on the firm. From a risk management standpoint, make sure anyone driving on the firm’s behalf has adequate limits and a valid driver’s license.
An additional coverage is workers compensation. If you have employees, this is a necessary coverage required by Oklahoma law. I am often asked about whether owners, shareholders or partners need to be covered. Personally, I think it is a pretty inexpensive coverage for catastrophic needs such as car accidents, but you can choose to opt out.
Selecting a Policy and Insurer
The best way to purchase the property and general liability coverages is in a policy that packages these coverages together. These are known as an office package policy, or a business owners policy. They enable broader coverage and have lower premiums than if you bought the coverages separately.
In case you weren’t aware, OAMIC can help you with these coverages, as well as workers comp. We selected an insurer that specializes in working with only professional groups and they have been outstanding to work with. OAMIC’s own coverage has been placed with them, as well as approximately 200 law firms.
I believe there will be benefits in the near future to limiting coverages to only professional groups. The overall loss experience on the office package and workers comp coverage will not be dragged down from the loss experience of other sectors that have higher exposure, both in general and workers comp specifically with respect to COVID-19 underlying causes.
Outlook for Property & Casualty in the Near Future
No different than most industries, the insurance industry as a whole is struggling in 2020. Lower interest rates producing lower investment returns and rising loss trends will negatively impact most insurers who were already falling short of making margins. This will only spur further market hardening – like increased pricing and tighter underwriting acceptability – for property and casualty coverages.
Professional groups have not been impacted like many others. It is for this reason it makes sense to place coverage with insurers who have concentrated in the professional groups noted above. We can help you with this, so please don’t hesitate to reach out to us.