Excess insurance: Protection for claims that exceed $1 million

Cover Pages: A guide to insurance for private practitioners summarizes the risks that you face as a practitioner and as a business person and the insurance that’s either provided through the Policy (Parts A, B and C) or available for purchase on the private market.  My Insurance Policy: Questions & Answers explains the Part A coverage in more detail. You will want to talk to your broker about buying additional insurance to protect yourself from the risk of claims that exceed the policy limits or are not covered. Information about protection for claims that exceed $1 million is below. Information about protection for claims that our policy does not cover is available here.

Although the $1 million limit offers generous financial protection for the majority of claims lawyers face, this may not be enough to protect you and your firm. If a mistake in your practice might lead to a claim that will cost more than $1 million to defend and pay, you are both at risk. For instance, you might miss a limitation for a client suffering a significant brain injury from a car accident, prepare a tax plan that results in your client being reassessed by CRA or draft a contract that fails to give your client full value for the company just purchased. Without excess insurance, you, and potentially your partners, will start paying for that claim out of your own pocket as soon as our limits are exhausted.

Excess insurance must be bought for the firm as a whole, not its individual lawyers. A broker can help you decide how much excess insurance may be appropriate for your firm, if any. Besides the financial consequences of just one mistake, other factors that will be considered include the frequency of large transactions and the potential liability for the mistakes of former partners. In addition, because excess coverage is generally triggered by discovery of the claim as opposed to when the work was done, you will also want advice on how long to carry excess so that you are protected when a claim is made.

Every year, we receive many reports of potential excess claims. Talk to a broker about buying excess. Sleep easy.

Excess insurance can also "drop down" and respond to risks that our policy does not cover, usually subject to a deductible or self-insured retention. Learn about Other insurance: protection for claims that our policy does not cover.