Running a law firm means managing risk every single day. You're protecting your clients, but who's protecting you? The right insurance isn't just a safety net—it's what keeps your practice alive when things go wrong. Here's the thing most attorneys don't realize until it's too late: one malpractice claim, one data breach, or one employee injury can wipe out years of hard work if you're not properly covered.
This checklist breaks down exactly what coverage your firm needs, what's optional but smart, and when to add more protection as you grow. Whether you're a solo practitioner or managing a multi-attorney firm, you'll know exactly where you stand by the end.
The Non-Negotiables: Essential Coverage Every Law Firm Needs
Let's start with the must-haves—the coverages that protect you from the most common and most expensive risks law firms face.
Professional liability insurance (also called legal malpractice insurance) is your first line of defense. It covers you when a client claims you made an error, missed a deadline, or gave bad advice that cost them money. Here's what surprises most attorneys: only Oregon and Idaho actually require you to carry it. But here's the catch—many states require you to disclose to clients if you don't have coverage. In Alaska, if your coverage is less than $100,000 per claim, you have to tell clients in writing. Try explaining that to a new client and see how confident they feel hiring you.
General liability insurance protects your firm as a business. Someone slips on your office floor? That's general liability. You accidentally damage a client's property during a site visit? Also general liability. It's basic business protection that covers bodily injury and property damage claims against your firm.
Workers' compensation insurance is legally required in most states if you have employees. It covers medical bills and lost wages if an employee gets hurt or sick because of work. In 2025, the average cost is $94 per employee per month nationwide. For law firms with office-based staff, you're looking at the lower end of that range—office work is considered low-risk compared to construction or manufacturing. But it's not optional. Skip it, and you could face serious legal penalties.
Cyber liability insurance is the coverage attorneys wish they'd bought before they needed it. You're handling privileged communications, Social Security numbers, financial records, and litigation strategies. According to the American Bar Association, 29% of law firms experienced a security breach in the last 12 months. That's nearly one in three. Cyber policies cover the costs of notifying clients, hiring forensic investigators, legal fees from regulatory investigations, and defending against lawsuits from affected clients. Every state now has data breach notification laws, so this isn't a maybe—it's a when.
Smart Add-Ons: Optional Coverage Worth Considering
Once you've locked down the essentials, there are a few additional coverages that make sense depending on your firm's size and structure.
Employment Practices Liability Insurance (EPLI) covers claims from employees—things like wrongful termination, discrimination, harassment, or failure to promote. If you have even one employee beyond yourself, this coverage protects you from employment-related lawsuits that can cost six figures to defend, even if you win. Employment litigation has been climbing steadily, and plaintiff attorneys know that most small firms settle rather than fight.
Commercial property insurance covers your office space, furniture, computers, law library, and equipment. If you own your building, this is essential. If you're renting, check your lease—many landlords require tenants to carry their own property coverage. It also covers business interruption, meaning if a fire or flood forces you to close temporarily, the policy can cover lost income while you get back on your feet.
Commercial auto insurance is required if you or your employees drive for business purposes—whether it's heading to court, meeting clients, or running to the courthouse to file documents. Personal auto policies won't cover business use, and if you get into an accident during a business trip, you could be stuck with the full bill and a denied claim.
A Business Owner's Policy (BOP) bundles general liability and property coverage into one package, often at a lower cost than buying them separately. It's a smart move for solo practitioners and small firms that want solid baseline protection without the complexity of multiple policies.
When to Level Up: Adding Coverage as You Grow
Your insurance needs change as your firm evolves. Here's when to add more protection.
When you hire your first employee, immediately add workers' compensation and seriously consider EPLI. The day someone joins your payroll, your exposure to employment claims skyrockets. When you bring on partners or associates, review your professional liability limits. Most policies are based on a per-claim and aggregate limit structure. If your firm is generating significantly more revenue or handling higher-stakes cases, your original $1 million policy might not be enough anymore.
When you start storing client data electronically—or expand the amount of data you're managing—revisit your cyber liability limits. Cyber insurance carriers are getting stricter about security requirements in 2025. To qualify for coverage, you'll likely need to show you've implemented multi-factor authentication, regular data backups, anti-virus software, and an incident response plan. Don't wait until renewal time to find out you're not compliant.
If you move into a new practice area—especially high-risk areas like securities law, intellectual property, or class actions—talk to your insurance broker. Some practice areas trigger higher premiums or require separate endorsements to be covered. The last thing you want is to take on a major case only to discover your malpractice policy excludes that type of work.
Your Annual Insurance Review Checklist
Set a recurring calendar reminder every year to review your coverage. Here's what to check:
First, confirm your professional liability limits still make sense. A good rule of thumb: your coverage should be at least equal to your annual gross revenue. If you've grown significantly, bump up your limits. Second, update your employee count for workers' comp. Premiums are based on payroll, so an outdated headcount means you're either overpaying or underinsured. Third, review your cyber security measures. Can you honestly say you meet your carrier's requirements? Many firms get surprised at renewal when their insurer asks for proof of multi-factor authentication or regular penetration testing.
Fourth, check your property values. If you've added new computers, upgraded your office, or expanded your space, make sure your property coverage reflects that. Fifth, review any exclusions or gaps. If you've moved into a new practice area or started offering new services, confirm you're covered. Finally, shop around every few years. Insurance is competitive, and loyalty doesn't always pay. Getting quotes from multiple carriers can save you thousands without sacrificing coverage.
Getting Started: What to Do Right Now
If you're reading this and realizing you have gaps in your coverage, don't panic—but don't wait either. Start by talking to an insurance broker who specializes in law firms. They understand the nuances of legal practice and can tailor a package that fits your specific needs and budget. Bring your current policies, a list of employees, details about your practice areas, and your firm's gross revenue.
The American Bar Association offers a Checklist for Purchasers of Professional Liability Insurance that walks you through what to look for when evaluating malpractice policies. Use it. And remember: the cheapest policy isn't always the best value. Look at coverage terms, exclusions, and the carrier's reputation for handling claims fairly.
Insurance feels like an expense until the moment you need it. Then it's the smartest investment you ever made. Protect your practice, protect your livelihood, and protect the years of work you've put into building your firm. Review this checklist, fill the gaps, and make insurance review a regular part of running your business. Your future self will thank you.
