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An Easy Way to Obtain Personal Excess Insurance

August 05, 2024

By Penne Crews and Bill Cleave

Many attorneys believe, in error, that their law firm’s business insurance policies provide personal insurance protection as well. This is typically not the case. In fact, while a law firm will often provide professional liability and business insurance coverage for their employees, these policies do not offer personal liability protection.

Likewise, many law firms do not focus on their potential exposure to the social or driving exposures of their employees. To address these “gray” risk management areas, many law firms now require that their equity partners show proof of personal umbrella (or personal excess) insurance each year. They have incorporated this requirement because these policies can provide additional protection for the individual and, indirectly, for the law firm as well.

Here are just a few of the reasons law firms give for requiring each equity partner to purchase a personal umbrella or personal excess policy annually:

• The firm has a general concern for the well-being and protection of the firm’s employees — especially if a partner becomes entangled in a personal lawsuit where legal and liability costs prove to be extensive. 
• The law firm’s legal structure might create the potential for joint and several liability. 
• The firm is concerned about host liquor liability. For example, suppose a partner of the firm hosts a party at their house, and a client (or prospect or employee) is injured. Will the firm be named in a suit? 
• Likewise, the law firm might be named in a suit in which a partner is involved in an at-fault accident while transporting clients, prospects, or employees in the partner’s personal vehicle.

Recent trends have increased the importance of securing excess personal liability coverage. For example:

• Statistics show that personal injury or tort trial filings are increasing. For example, the U.S. district courts reported that from 2019 to 2020, civil filings increased 16 percent (up 46,443 cases) to 332,732. 
• For dog owners, the Insurance Information Institute found that $1.12 billion was paid out in 2023 for dog bite claims. 
• As for our roadways, the ranks of uninsured and underinsured motorists are rapidly growing. In fact, the Insurance Research Council’s (IRC) 2023 report found that approximately 14 percent of all drivers involved in accidents were uninsured. The IRC estimates that an additional 15.7 percent of drivers are underinsured. Thus, as many as 29.7 percent of all drivers are either uninsured or underinsured. 

This is only a short list of potential personal liability exposures. In our society, you never know what might trigger a lawsuit. Even if the suit is groundless, defense costs can be substantial.

One simple way to address these potential defense and liability costs is to secure a personal umbrella or personal excess policy. However, these policies often require extensive information from the insured and lengthy underwriting from the insurance company.

Another option is to apply for a group personal excess (GPE) policy. These policies are frequently offered by a bar association to members (or by a law firm to its employees). A GPE policy allows the insured to purchase their own level of coverage but at reduced group rates and simplified underwriting.

Here are some advantages:

• Competitively priced coverage via the group buying mechanism
• Broad coverage, including excess uninsured/underinsured motorist coverage
• Online rate/quote/bind/pay
• Flat rates by limit
• Streamlined underwriting with only a short online application
• Limited surcharges for things like youthful drivers or extra residences
• No need to change the underlying home or auto insurer or agent
• Coverage for watercraft, recreational vehicles, and tenant property

Many large law firms have provided a GPE program to their employees for years. However, if a bar association sponsors a GPE, then individuals can take advantage of these programs as well. 

For information on a group personal excess program for D.C. Bar members, visit https://dcbar.nfpgroupexcess.com. Select the green "Register" button and enter all information, including the company code 0172. From there, you will be able to input all your information and get a quote — typically within 10 minutes. The policies are backed by an “A” rated, billion-dollar insurance company.

Penne Crews is vice president and product manager for the NFP Group Excess Liability program, and Bill Cleave is president of the Flagship Insurance Agency.