The Coverage Stack
Most firms don’t buy everything on day one. Coverage gets added in layers as the firm grows, hires, signs a lease and takes on bigger contracts. Here is the usual order, and what tends to trigger each layer.
- 01First client, first contract
Opening the doors
Professional liability is the foundation for a design or consulting firm: it is built for claims that your work caused a client a loss. General liability handles injury and property damage, like a visit to a job site.
What contracts ask for: Most client contracts ask for professional liability, often $1M per claim, and a certificate showing general liability.
- 02Employees on payroll
Your first hire
Workers’ compensation pays for employee injuries on the job. Most states require it once you have employees, and the rules vary by state and industry.
What contracts ask for: Owners and GCs often ask for workers’ compensation with a waiver of subrogation before your team sets foot on site.
- 03Signing a lease or buying gear
An office, equipment and a lease
Property coverage protects computers, plotters, scanners, drones and furniture. It is often packaged with general liability in a business owner’s policy (BOP). If you own the building, it goes here too.
What contracts ask for: Leases usually require general liability naming the landlord as additional insured, and sometimes a set amount of property coverage.
- 04Handling data and payments
Client files, email and wires
Design files, client data and wire transfers make firms a target. Cyber coverage helps with breaches and ransomware. Crime coverage helps with theft and payment fraud.
What contracts ask for: Public agencies, hospitals and larger clients increasingly ask for cyber coverage in their contracts.
- 05Staff drive for work
Driving to sites
Even without company vehicles, employees driving their own cars for work create exposure. Hired and non-owned auto coverage addresses that. Company owned vehicles need a commercial auto policy.
What contracts ask for: Many contracts ask for auto liability, often $1M, even for firms that do not own a single vehicle.
- 06Limits above your base policies
Bigger projects, bigger contracts
Umbrella and excess policies add limits above general liability, auto and employer’s liability. For one very large project, a project-specific professional policy can keep that project’s limits separate.
What contracts ask for: Larger owners ask for $5M or more in total limits, per project aggregates and primary and non-contributory wording.
- 07Ownership and people decisions
Partners, investors and a growing team
D&O covers claims about management decisions. EPLI covers claims from employees about hiring, firing and workplace conduct. Fiduciary covers claims about your 401(k) or benefit plans.
What contracts ask for: Investors and lenders may ask for D&O. EPLI and fiduciary usually come from your own growth, not a contract.
A typical order, not a rule. What you need depends on your services, your contracts, your state and your clients. Coverage depends on the terms of each policy as issued.
Tell Us About Your Firm. We’ll Tell You What We See.
Starting out or renewing, with a policy in hand or not. If something is worth discussing, we’ll call. If not, we’ll say so.