Insurance bond and Professional indemnity insurance in Norway

The bond covers the lawyer's professional liability for a client´s or third party´s loss. The professional indemnity insurance, is the lawyer´s protection.

According to § 222 of the Courts of Law Act (domstolloven), every practicing lawyer/advocate in Norway must provide an insurance bond (sikkerhetsstillelse) for their law practice. The insurance bond is comparable to a guarantee.

According to the Code of conduct rule 3.6: the lawyer must also uphold a professional indemnity insurance (profesjonsansvarsforsikring), also called PI.

The bond (sikkerhetsstillelsen) covers the lawyer's professional liability for a client´s or third party´s loss caused by the lawyer/ the lawyer´s advocacy.

The professional indemnity insurance, however, is the lawyer´s protection: if a client or third party incurs a loss and the insurance bond provider has to pay for the loss under the insurance bond, the insurance bond provider can hold the lawyer liable for the payment by recourse. But since the lawyer must uphold a PI/professional indemnity insurance, such insurance will cover the recourse.

The insurance bond also covers fraud. E.g., the lawyer steals client money.

The PI/indemnity insurance will, however, not cover fraud. In such a case, the advocate has to pay the recourse. 

According to § 222 of the Courts of Law Act and the Regulation for Lawyers § 2-5 the amount of the insurance bond for each lawyer has to be at least NOK 5 million.

If the Lawyer is an employer/has a trainee lawyer, the amount of the insurance bond has to be at least NOK 8 million.

Regarding the PI/indemnity insurance, the normal coverage for advocacy is NOK 5 or 8 million. It is not uncommon that law firms obtain collective insurance covering all their lawyers, and this may result in coverages of several hundred million NOK. The premium for such coverage will be individually brokered.

The Norwegian Bar Association´s bond and PI offering and work

The terms/conditions of the insurance bond are stipulated in the Courts of Law Act and the Regulation for Lawyers chapter 2, and the terms for the insurance bond offered by the insurance companies are therefore identical. 

The conditions of the PI/indemnity insurance, however, differ from insurance company to insurance company since the conditions are not stipulated by law.

The Norwegian Bar Association's most important membership offering is the offer of insurance bond and PI/indemnity insurance for law practices. The Norwegian Bar Association has more than 40 years of experience with PI/indemnity insurance for lawyers and works continuously to ensure that the members have the best coverage and terms in the market.

The Bar Association designs the insurance terms for its PI/indemnity insurance offering. The Association has developed terms for both individual/smaller law practices and large law firms. In its efforts to offering the best terms to the members, the Bar Association rely on assistance from an insurance broker.