How Legal Malpractice Insurance is Priced
A Step Rate credit is issued to you on a declining scale throughout your first six years of coverage. But what exactly is the credit and how does it work? Read below to learn more.
Because of the nature of legal malpractice insurance claims, the underwriting risk for an attorney does not fully mature until there is approximately 6 full years of prior exposure that is insured. Therefore, for your first six years, your premium is less because of this limited exposure. This pricing methodology is called Step Rate credit.
The credit is highest – meaning your premium owed is lowest – during the first year of coverage and is gradually reduced in each subsequent year, as the risk associated with the insurance policy matures. This has the effect of incrementally increasing your premium until the premium is fully mature after six full years of continuous coverage.
See the chart below for a visual representation of the Step Rate methodology.