How much insurance do I need?
This is different for every lawyer and is dependent upon the number and types of cases you handle, and the potential amount of damages and defense costs should a claim arise. A consideration is the nature and extent of both your business and personal assets, since, if you are liable for malpractice, your personal assets are potentially subject to collection under a judgment.
Another consideration in determining your appropriate limit is whether you want a per claim limit for a given policy period for multiple claims. One policy, for example, may have a $1M/$1M limit, meaning you have $1 million per claim, and $1 million in the aggregate, available to you for claims made within that policy period. Another policy may have $1M/$3M, meaning you have $1M per claim for the policy period. If you have three claims in a policy period, $1 million is available for each, for example. While it would be a unique circumstance where you get sued three times in one year, it does happen.
Finally, keep in mind that almost all malpractice policies “deplete,” meaning the fees and costs for your defense are paid from the limit available for the claim. If you have a very low limit ($100,000, for example), then it may be possible that you do not even have enough available to defend the case through trial (leaving nothing left to satisfy a potential judgment).
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