The Law 2/2007 of professional societies governs this type of companies, which regulate doctors, lawyers, architects. The eternal doubt, which clients always ask us, is whether they really need this policy, having already, as they are obliged to, an insurance for individual lawyers. Now we will see what the Law and the terms and conditions of the policies indicate.
The regulations applicable to professional companies – Law 2/2007
When acting and billing through a company, we must be aware that we are talking about independent entities (me, the lawyer, and my company). In this way, a client who considers that a work performed is not well done, could claim against me, as well as against my company. A fortiori, if I have employees and they are the ones who could commit a negligence.
Article 11 of the aforementioned Law states with respect to the debts that may be incurred by the company:
The company and the professionals, whether partners or not, who have acted shall be jointly and severally liable for the corporate debts arising from the professional acts themselves.
In other words, the partners and professionals of the firm will also be personally liable for these obligations.
But, what is even more emphatic, in its 3rd paragraph it says:
Professional societies must stipulate an insurance policy to cover the liability they may incur in the exercise of the activity or activities that constitute the corporate purpose.
Is it common for companies to be reclaimed?
In recent years, the claims and loss ratio for professional liability insurance has risen sharply.
In this environment, there has also been an increase in claims against companies for these reasons:
- In many cases, several people from a company are involved in a job.
- The perceived solvency of a company is higher than that of an individual person.
At the same time, we have already talked about the essential insurances for a company, and this liability insurance was one of them.
What happens if my company does not have insurance and I receive a claim?
We can find ourselves in two situations:
- There are times when the individual policy offers an extension of coverage to the partnership. That is to say, coverage could be provided for certain events, although it will always be much better to have a separate policy for the company, since there are coverage gaps in that extension.
- If we do not comply with the extension requirements, when giving the report for the individual policy, the insurance company will tell us that the company is not insured in the insurance. In this case, it will not even cover the legal defense expenses in the process that is initiated.
Our advice as a brokerage firm specializing in lawyers
Given the clear requirement of Law 2/2007 to take out professional liability insurance, and the possible consequences of not having it, becoming personally liable for the debts incurred by the company, we strongly recommend taking out insurance in the name of the company.
Nowadays, there are insurance companies very specialized in insurance for lawyers. In addition, thanks to the competition in the current insurance market, the rates are not what they were before(from 200 euros you can find a complete insurance). Ask us and guarantee your peace of mind against possible claims. We will advise you on the sum insured and the coverage you need.
