Short answer
Before you compare prices on your first professional liability policy, ask the same questions of every quote. Cover five areas: coverage fit, contract requirements, claims handling, room to grow and total cost. We recommend running our quotes through this list too. The cheapest option can fall short of a contract, and the best coverage may not fit your budget.
Questions about coverage fit
Professional liability, also called errors and omissions (E&O), covers claims that your professional services caused a client financial loss. Start by confirming the policy fits the work your firm does.
- Does the policy describe your discipline and services accurately, including any inspection or consulting work?
- Are there exclusions that affect services you perform, such as certain project types?
- What limits does the quote offer, and do they match what clients ask for?
- Does the policy cover work done by subconsultants you hire?
Coverage depends on the actual policy terms, conditions and exclusions, so read the form and not just the quote summary.
Questions about contracts on your first professional liability policy
Clients often check your insurance before you start work. Review the contract requirements before you bind.
- Does the contract require a minimum limit or a specific deductible?
- Does it require an admitted carrier, which means one licensed in the project state?
- Does it set a minimum carrier rating, such as an A.M. Best grade?
- Does the contract include indemnity or warranty language that your policy may exclude?
- Has someone reviewed the insurance section against the quote?
If any answer is unclear, ask the client before you buy. Fixing a mismatch after the certificate of insurance is rejected takes more time.
Want this looked at for your firm?Tell us what your firm does. A specialist reviews it and comes back with options.
Get a Quote →Questions about claims
A policy matters most when a claim arrives, so look closely at how it responds.
- Does defense cost sit inside the limit or outside it? Inside means defense spending reduces the limit available to pay a claim.
- What is the deductible, and does it apply to defense costs?
- What prior acts coverage applies? Prior acts coverage addresses work done before the policy started.
- What is the retroactive date, and does it start on the first day of coverage?
- Does the carrier offer help before a claim, and how do you report a problem?
- What is the extended reporting period, also called tail coverage, if you close or switch carriers?
Questions about growth
A first policy fits a small firm today, but your needs can change quickly.
- What happens to the premium when your revenue grows?
- Can you raise your limits mid-term if a client asks?
- Does the policy cover new services, new employees or a second office?
- Will the carrier still write your firm as you take on larger projects?
Questions about cost
Premium is only one part of the bill. Ask for the total amount due.
- What does the quote include besides the base premium?
- Are there broker fees or policy fees?
- Do surplus lines taxes and fees apply? These appear on non-admitted policies, and they vary by state.
- Can you pay through direct installments, or does the carrier require premium financing?
- Is there a minimum earned premium, or is the policy fully earned at the start?
Taxes, fees and installment charges differ by state and carrier, so compare all-in cost rather than premium alone.
A real-world example
A new landscape architecture firm receives two quotes for its first professional liability policy. Quote A has a lower premium. Quote B has a higher premium and a better-known carrier.
The firm checks both against its first client’s contract. The contract requires a minimum carrier rating and an admitted carrier. Quote A comes from a non-admitted carrier with a lower rating, so it does not meet the requirement.
Quote B satisfies the contract and offers direct installments. The higher premium looked worse at first, but it was the only quote that worked for the project.
What should I do before I request quotes?
Gather your contracts, your revenue estimates and a description of your services. Having the insurance requirements in hand lets your broker target carriers that fit.
Is the cheapest quote usually the best choice?
Not necessarily. A lower premium can come with a higher deductible, narrower coverage or a carrier that does not meet your contract. Compare the full picture before deciding.
Do I need a printable version of this checklist?
A printed list can help when you compare several quotes side by side. Use the same questions for each quote and note the answers in writing.
How long should the buying process take?
It depends on the carrier and your information. Start before your first contract begins so you have time to review options without rushing.
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