Professional liability insurance is a necessity for lawyers. Unfortunately, not all lawyers are able to secure the coverage they need in the standard marketplace because they are considered to be a distressed risk. The question is, what exactly does distressed mean?
A distressed risk is one that has difficulty securing professional liability insurance because of claim frequency, claim severity or disciplinary complaints or actions. While distressed is often used interchangeably with hard to place, the two terms are different in that hard to place generally means the lawyer or law firm practices in a more risk prone practice category such as Personal Injury Plaintiff or Patent but is usually claim and disciplinary action free. If the term distressed describes the loss or disciplinary history of a law firm, the firm faces many more challenges in finding professional liability insurance and generally has to settle for less coverage at a considerably higher premium. The good news is that there are a few markets available, operating on a surplus lines basis, to meet the professional liability needs of the distressed law firm.
Surplus lines is often referred to in...
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