Professional liability insurance—sometimes called malpractice insurance or errors and omissions insurance—is insurance that may be purchased by attorneys and law firms to pay the costs of defending legal malpractice claims, and the costs of settling such claims or paying the judgment awarded to a plaintiff on such a claim. Most states do not require attorneys to purchase professional liability insurance, but some states require attorneys who do not carry professional liability insurance to provide notice to their clients of that fact. Some states require attorneys to have their clients sign a written disclosure that the attorney does not have professional liability insurance.
In Texas, attorneys are not mandated by state law to carry professional liability insurance, commonly known as malpractice insurance or errors and omissions insurance. However, the Texas Rules of Professional Conduct require attorneys who do not have professional liability insurance to inform their clients of this lack of coverage in writing if they do not maintain such insurance in amounts of at least $100,000 per occurrence and $300,000 in the aggregate, per year. This disclosure must be made at the time of the client's engagement of the attorney, and the attorney must obtain a signed acknowledgment from the client. Failure to comply with these disclosure requirements can result in disciplinary action by the State Bar of Texas. It is important for clients to be aware of their attorney's insurance status, as it may affect their decision to engage with a particular attorney or law firm.
