Authored by Sara Weathers

Underinsurance is a significant and often overlooked risk for law firms.

Many firms assume they are “fully covered” because they have insurance policies. However, true coverage depends on policy limits, definitions, and exclusions.

Why Law Firms Become Underinsured

1. Revenue Growth Without Coverage Review

If your firm’s size has grown but liability limits remain unchanged, coverage gaps may exist.

2. Rising Claim Severity

Malpractice claims are increasingly costly to defend, and even unfounded claims can result in substantial legal fees.

3. Property Valuation Increases

Rising construction and office build-out costs mean that older policy replacement values may be outdated.

4. Business Interruption Miscalculations

Firms often underestimate recovery time from events like cyberattacks or natural disasters, leading to insufficient income protection.

The Hidden Danger

Underinsurance is often only identified when a claim is filed, and policy limits or coinsurance penalties are triggered.

What to Do Now

• Conduct an annual coverage audit
• Reevaluate limits based on revenue and case size
• Update property replacement values
• Stress-test business interruption calculations

Your insurance coverage should be adapted as your firm grows. If you have questions about your policies, AdvoCap Insurance is here to help.