$3M Professional Liability (E&O) Insurance for Credentialing Services

If a hospital or health plan asks your credentialing firm for $3M, Professional Liability (E&O) can be one $3M primary policy or a smaller primary plus follow-form excess.

What does a $3M requirement mean for credentialing firms?

Professional Liability (E&O, short for Errors and Omissions) insurance can help when a customer says your work caused a financial loss. Credentialing firms check licenses and enroll providers with payers (insurers and health plans). A $3M clause often reads like this:

• Per claim and aggregate: the most paid for one claim, and for all claims in a year.
• Claims-made: the policy covers claims made and reported while it is active. The retroactive date is the earliest date of work it covers.
• Services covered: check that the policy names enrollment, primary source verification (checking a record with its original issuer) and license monitoring.
• Combined limits: if the clause does not say limits may be met by primary plus excess, confirm with the client that a primary plus follow-form excess policy meets it.

Who asks credentialing firms for $3M?

Credentialing firms are non-clinical vendors. Clinicians need medical malpractice insurance, a different policy. A $3M request may come from the party that relies on your work:

• Hospital systems that outsource their medical staff office
• Health plans that hand credentialing to a vendor (called delegated credentialing)
• Large physician groups enrolling many providers

How is $3M built?

A primary policy pays first. An excess policy pays after the primary limit is used up. "$1M xs $2M" means a $1M layer above the first $2M.

Credentialing firms often buy a Miscellaneous Professional Liability form, made for service businesses that do not fit a named profession. A firm that sells its own software platform may need Technology E&O instead. Layers should follow the same terms, including the retroactive date. Many policies pay defense costs inside the limit, so check each layer.

Compared with $2M, a $3M limit adds an extra $1M to draw on after a missed enrollment deadline or lapsed license, and a single $3M primary may be harder to place than a primary plus excess. A $1M primary can be the base for a $2M xs $1M layer.

A commercial umbrella almost never covers Professional Liability. See Does a commercial umbrella cover Professional Liability?

What will underwriters ask for?

An underwriter decides whether to offer coverage and on what terms. Expect these questions:

• Your services: credentialing, payer enrollment, re-credentialing (renewing a provider's approval) and license monitoring. Also whether you support hospital privileging (a hospital's approval for a clinician to treat patients there).
• How many providers and facilities you manage, and how many enrollments you file yearly
• Whether you do delegated credentialing, and for which payers or hospitals
• How you verify licenses, board certifications and sanctions (formal penalties against a license), and how you track expiration dates
• Whether you check exclusion lists (government lists of providers barred from federal health programs)
• How you protect personal data, plus your loss runs (a report of past claims)

What affects the cost?

• Volume and scope. More providers and payers usually mean more exposure.
• Delegated work. Final credentialing decisions for a plan usually carry more risk than preparing files.
• Process controls. Written expiration tracking, primary source verification logs and second-person review of payer enrollment filings can help.
• Claims history. Past claims can raise the price or narrow options.
• Structure and terms. The primary layer often costs the most per $1M of limit. Retention (the amount you pay before coverage starts, like a deductible) also moves the price.

Frequently asked questions

Do I need $3M Professional Liability as a small credentialing firm?

Not usually. $3M tends to come with larger hospital or health plan contracts. See $2M Professional Liability for credentialing services.

Can a hospital be added as additional insured on my credentialing Professional Liability?

Usually not. Professional Liability protects you against claims alleging errors in your services, including claims from clients, so naming a client as an insured is not a standard feature of the coverage. Some clients accept a certificate of insurance (a one-page summary proving your coverage). Check your contract.

I already have a $1M policy. How do I get to $3M Professional Liability?

Request new quotes through Morrow, either a new $3M primary or a primary plus excess layers, keeping your retroactive date and prior acts coverage where the market allows. If you know of an incident, report it to your current carrier before you switch.

Is Cyber included in Professional Liability for a credentialing firm?

Usually not. Professional Liability responds to errors in your services. Cyber responds to data breaches. Hospitals and plans may ask for both because you handle license numbers and personal data. See Professional Liability for healthcare vendors.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.