Making a decision on what type of insurance carrier is right for you is a decision that involves multiple options and preferences. A major decision that lawyers make is choosing between a large or a small carrier. This can be confusing as each type of carrier has its set of pros and cons. To make things more confusing, most times your state bar association will have a sponsored professional liability plan as well. 

So what makes a large insurance carrier different from a small insurance carrier? As a smaller insurance provider, Proxture receives this question often.  We will explain the features of each and how they may affect your law firm. 

Making the right decision takes some time, but to ensure the best coverage for your work it is a worthwhile investment to consider your options.

Considering General Policy Precursors 

To help determine what type of carrier works best for you, consider the aspects of a large versus small carrier beforehand to help clarify what you are looking for. 

While some attorneys solely look at the price of their policy as their decision making factor, many will give greater consideration to policy features. Depending on the size of your firm, some insurance carriers offer better coverage as they will specialize in only large firms, or small firms. This is why it is important to consider multiple insurance providers and to know what size firm they specialize in covering.

Customer service is another important factor to consider. How important is it to you that your insurance carrier be available when you have questions? Does your carrier value your time and business? This matters to many firms as they want reassurance of a helping hand, especially during an ongoing claim. 

Another popular avenue to explore is  AM Best Ratings. The AM best rating is a good way to judge an insurance carrier's reputation and financial stability. Considering the pros and cons of large and small carriers is the next step when deciding which is best for you.

Pros of a Large Scale Insurance Agency

Being insured by a large scale carrier offers numerous benefits. 

Larger companies are usually well established and have been around for many years. Because of this, they are typically more financially stable, so even in an economic downtown you can be assured that your carrier will still be in business. 

Another benefit of large scale carriers is they usually have a higher AM Best rating compared to smaller carriers, meaning they are more consistent paying out on claims. 

Your customer service availability is another advantage as most large carriers offer 24/7 service hotlines. Even though large, established insurance companies offer many benefits, there are a few downsides as well. 

Cons of a Large Scale Insurance Agency

One common downfall of large carriers is that they tend to not offer as much of a personal experience compared to small scale carriers. This is due to the sheer amount of agents and customer service representatives they house. This means a client might have a different representative every time there needs to be communication. 

Another disadvantage is that they might not offer speciality coverage as they are only interested in offering more broad types of coverage. Depending on a firm's needs, this can be something to consider as well.  

Pros of a Small Scale Insurance Agency

As they are smaller with less employees, small insurance companies can offer a more personal experience as they have a small team of agents that look over their specific clients. 

Smaller companies might be able to also offer specialized coverage that have lower premiums or specific limits. Sole practitioners or smaller firms often find this to be a great value as they do not always need a large, broad policy.

Things like lower overhead and lower invested liability can help differentiate a smaller firm's prices compared to larger firms, ultimately helping keep their rates down. Small carriers are able to keep rates lower because they are focused on providing coverage to single attorney or small scale firms that do not have the amount of risk exposure that larger firms have. This is why smaller insurance carriers offer a great opportunity for small law firms to get a reasonable premium rate.

Cons of a Small Scale Insurance Agency

Although the positive attributes of a smaller firm are known, it is important to think about the negatives of a smaller sized firm. Oftentimes the AM Best rating is lower than a large company as the smaller insurance carrier might have difficulty paying out claims during high risk times. 

Customer service may be limited to regular business hours only as well as they might not have a dedicated team to answer the phones during non business hours. 

For larger law firms, having a small insurance carrier might be difficult as small carriers do not insure large amounts to keep liability down. Due to this, small carriers might only carry solo or small sized firms, as their limits align with what small firms are looking for. Choosing a small sized insurance provider does cater to smaller firms better than others.

Policy Enhancements

Another important consideration when choosing the type of carrier and policy for your professional liability insurance is the policy enhancements that are included. 

Policy enhancements offer extra protection. Enhancements can be defendant reimbursement, mediation credit, crisis event, network coverage and client discrimination. 

Policy enhancements differentiate from carrier to carrier so inquiring about what company offers what enhancement is a good practice to get into as it allows you to see what is being offered on the market. 

Enhancements are not extra cost usually so they are known to be additional benefits to a policy. They can give you the peace of mind that you are properly protected. 

Making The Right Decision

Deciding between a large or small insurance carrier to provide you professional liability insurance offers you a number of different options. There is not necessarily anything wrong with either a large or small carrier but there are differences that can benefit your firm depending on what you are looking for. Taking the time to consider each policy and the provider that offers them will help you choose the right carrier for your firm.