If you’ve ever wondered what the difference is between inside and outside limits for legal malpractice insurance, ALPS Business Development Representative Kurt Whitmire provides a two-minute explanation.
Hi this is Kurt Whitmire, Business Development Representative for ALPS Insurance. Today I’m here to talk to you about the important topic of inside versus outside policy limits. Every day I talked to attorneys about malpractice insurance quotes and typically the first thing we discuss is their current policy or a quote from another carrier that comes with inside or outside limits. When you compare two different quotes with the same deductible in the same limits sometimes there’s very different premiums offered. The reason for this could be that one policy comes with inside limits. If you see a policy with inside limits don’t necessarily feel that that’s the one you should go with. Just because it’s cheaper doesn’t mean it’s going to provide as good a coverage. An inside limits policy is also known as a cannibalizing or an eroding limits policy. This is because every dollar spent on defense costs erodes or reduces the limit available to pay loss payments. This could be dangerous. A better alternative is to go with a policy that has a claims expense allowance – also known as outside policy limits. Most ALPS policies come with outside limits. The reason why you want to go with a policy with outside limits is because it best protects what you have available to pay a potential large loss. So what do you want for your malpractice insurance policy? Cheaper inside limits that cost you more in the long run or outside limits that protect your firm’s best interests. So if you have any other questions about this or any other malpractice insurance questions, reach out to us here at ALPS and you’ll be offered exceptional customer service and expert advice. Thank you.