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 the state of Delaware, attorneys are not mandated by state law to carry professional liability insurance, commonly known as malpractice insurance or errors and omissions insurance. However, Delaware does have rules that require attorneys to disclose to their clients if they do not carry such insurance. Specifically, Rule 1.4(c) of the Delaware Lawyers' Rules of Professional Conduct states that a lawyer shall inform a new client in writing if the lawyer does not have professional liability insurance of at least $100,000 per occurrence and $300,000 in the aggregate, unless the client is provided such information by other means or the legal services are provided to a governmental entity or are limited to the preparation of an opinion of title. This disclosure must be made at the time of the client's engagement of the lawyer, and the lawyer must keep a record of such disclosures for six years after the termination of the representation of a client. Failure to comply with these disclosure requirements can result in disciplinary action against the attorney.