Lawcovernotes December 2016

3. 1. What is Lawcover’s optional Top Up insurance? Optional Top Up insurance affords protection above the primary insurance limit of $2m and up to $20m for each claim. When considering the number and type of legal services that your law practice provides, together with the value of each matter you undertake, the amount of a potential professional liability claim could easily exceed the primary $2m limit of indemnity. If a claim exceeds the primary $2m limit, partners and directors may face potential uninsured personal exposure. In some instances, this can have a devastating impact on the ongoing financial viability of the law practice. 2. How does Top Up insurance work? Lawcover offers competitive and affordable rates on various levels of Top Up insurance to suit your law practice, subject to certain criteria. When thinking about Top Up insurance, you should consider independent advice from an insurance broker or independent adviser to help you to choose the right level of Top Up for your law practice. If you purchase Lawcover’s optional Top Up insurance, we provide a simple endorsement to your existing primary $2m PII policy wording. In the event of a claim, you’ll experience the efficiency and peace of mind of having a single policy wording and liaising with a single Claims Solicitor. 3. What if I’m a member of the Law Society of New South Wales Scheme (also known as the Limitation of Liability Scheme)? If you are a member of the Law Society of New South Wales Scheme (the Scheme), and your law practice bills less than $10m per year, it is tempting to think that the primary $2m limit and the Scheme cap of $1.5m will be all the security you need for any claim in excess of those amounts. However, it is important that you bear in mind: ^ ^ The Scheme seeks to limit liability for claims brought under NSW law only. If proceedings are brought against your law practice in another state or in the federal jurisdiction, the Scheme does not apply ^ ^ The Scheme seeks to limit liability for damages and claimants’ costs to (in most cases) $1.5m. The Lawcover policy limit of $2m includes defence costs. If a claim against your practice is complex, or subject to numerous interlocutory applications or appeals, the defence costs can substantially erode the primary $2m limit. That leaves the balance for the claimant’s damages and their costs if an award is made in their favour. It may not be enough ^ ^ Law practices billing more than $10m per annum are required to hold PII insurance up to $10m in order to qualify for the Scheme 4. What next? The points above illustrate why you should consider Lawcover’s optional Top Up insurance. The Scheme and Lawcover’s optional Top Up insurance work well together to afford maximum security to law practices facing claims in excess of the primary $2m limit. Please carefully consider a limit of insurance cover that best reflects your law practice’s potential exposure should a claim arise. If necessary, seek independent advice on the appropriate limit for your law practice and then speak to one of our experienced Insurance Services staff on 1800 650 748. Kerrie Lalich Chief Operations Officer