Friday, June 3, 2011

Adequate Insurance Coverage

One thing that I always recommend to clients is that they should always have adequate insurance coverage. Insurance limits one’s exposure to liability and in many cases it is also required by law. It is my experience that client’s usually do not appreciate the importance of insurance until they make a claim or receive a benefit.

Whether you are dealing with a car accident, a medical negligence claim, or even a workers compensation claim there is usually some type of insurance in the mix. Understanding insurance should be in every attorney’s tool kit because whether you are advising businesses or individuals, insurance is generally if not always a must. For example, anyone involved in estate planning can tell you that life insurance and annuities are often used, and certainly recommended for clients that can buy life insurance for little cost. I have met with fairly young clients (mid 30’s) that have children and have a net worth of roughly $250,000; in cases like this life insurance makes sense because it is relatively inexpensive due to the client’s age and is recommended because $250,000 simply is not enough considering the cost of education.

When conducting transactional work, general liability insurance is a must in many situations such as for any newly formed business that plans on operating in any way. Insurance can be obtained for a variety different risks or liabilities too; for example golf courses can buy hole-in-one insurance for fundraisers that give large prizes to anyone that hits a hole-in-one. One of the most important aspects of insurance is that certain types of insurance come with a duty to defend on behalf of the insurer; this is usually true in professional malpractice insurance. In some cases the duty to defend is even more valuable than the duty to indemnify.

Examples of underinsured entities can be seen in many of the cases that are assigned reading in law school. I can readily recall my business associations class from law school where my professor would ask “What could this business have done differently?” Often one solution was that the business should have carried adequate insurance. Transactional lawyers are expected to have some foresight and that includes recommending insurance coverage that would be adequate to protect the client’s interest. Another person that can aide in recommending coverage levels is an experienced insurance broker. Having a relationship with an experienced insurance broker is extremely valuable because helping a client select proper insurance coverage may require back and forth communications between the attorney and the insurance broker.

See my website to find out more about what I do and about how to contact me, Albuquerque Attorney

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