Today we’re going to talk about legal defense cost and why insuring yourself properly is so important!
Take a quick look at this story that came across the wire from the Associated Press last week.
For the purposes of not getting sued myself, I made the names anonymous:
ALBANY, N.Y. — Two doctors are playing golf on Long Island. New York’s top court will hear arguments Tuesday about whether “The Defendant” was negligent and should have yelled, “Fore!” as a warning before the shot. A midlevel court, divided 3-1, agreed, concluding “The Plaintiff” was “not in the foreseeable danger zone” and his friend had no duty to yell the customary warning.
Let’s say for arguments sake (I have no idea how much The Defendant’s legal expense was) that The Defendant in this situation is never found guilty of negligence and no court throughout the life of this case ever grants The Plaintiff an award.
Great news for the The Defendant, right?
Until he receives the bill from his Lawyer and sees the defense cost.
The Defendant was so overjoyed to be found not guilty that he didn’t stop to think about the fact that the average hourly billing rate of a lawyer in the Northeast is $319 (according to Lawyers.com). Not to mention all the paralegals that worked on the case at $100 per hour.
Oh, and when the case went from local courts to the mid-level court the legal team grew a little so now The Defendant is paying for three additional lawyers and their paralegals as well.
I’m not saying that having proper legal defense is not worth while, what I am saying is the Defense Cost Alone of Fighting a Lawsuit Can Bankrupt You!
This is why liability coverage is so important. Homeowners, Renters, Auto, Motorcycle, Trailer, Condo, ATV, Boat, Business, Technology, Employment Practices, Employer (Workers Comp), Fiduciary, Director’s and Officer’s, Professional, etc, etc…
On most liability policies that you will find in circulation today the Insurance Carrier does NOT have the duty to defend you if coverage does not apply. That means if someone brings a lawsuit against you and you do have applicable coverage for the suit. The Insurance Carriers of the policies you do have are not going to defend you.
Example: Your Commercial General Liability policy is not going to respond with Defense in a loss involving your Business Auto. If you don’t have a Business Auto policy you are going to have to come out of pocket to defend your business.
I thought my insurance carrier had Duty to Defend me? In most policies, Yes, they do, unless the policy does not cover that exposure.
I want to go deeper on this content in future articles, but for now, I just want to get the point across that your liability policy provides more than just coverage when being found guilty. Often even more important that coverage for a legal judgment is the Defense coverage.
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Disclaimer: This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.