$5M Professional Liability (E&O) Insurance for Customs Brokers

A $5M Professional Liability (E&O) requirement means your customs brokerage needs $5M per claim and in total per year, met by one primary policy or primary plus excess.

What does a $5M Professional Liability requirement mean for customs brokers?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work, such as a wrong tariff code (the number that sets the duty rate) on an entry (the filing that clears goods through customs), cost a client money. A clause might read:

• Each claim and aggregate: the most paid for one claim, and for all claims in a policy year.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work on or after the retroactive date (the earliest work date the policy covers). See retroactive dates.
• Not the importer's customs bond: a bond guarantees duties and fees owed to the government. It does not pay a client's loss or count toward the $5M.
• Stacking: the last sentence allows primary plus excess. If your clause is silent, confirm with the client that primary plus follow-form excess meets it.

Who asks customs brokers for $5M?

A $5M request often relates to the client's duty exposure, and not only to your size:

• National retailers and large e-commerce sellers with high entry volume.
• Importers of goods facing antidumping or countervailing duties (extra duties on certain goods from certain countries).
• Manufacturers using drawback (a refund of certain duties) or foreign trade zones (secure areas where duties can be delayed or reduced).
• Freight forwarders, third-party logistics companies (3PLs, which run shipping and warehousing for other firms) and carriers that subcontract customs work to you.
• Government contracts and prime contractors, where a request for proposal (RFP) can set the limit.

A $3M request, covered in $3M for customs brokers, often fits one primary policy plus one excess layer. $5M more often needs a tower or a large primary. A $2M clause (see $2M for customs brokers) is often met by a primary policy alone.

How is $5M built?

A primary policy pays first. An excess policy pays only after the layer below it is used up. "$3M xs $2M" means a $3M layer sitting above the first $2M.

Each excess layer should follow form, meaning it uses the primary policy's terms. Every layer should share the same retroactive date, policy period and named insured (the business the policy covers). Together, the layers are a tower. A commercial umbrella almost never covers Professional Liability.

What will underwriters ask for?

• Yearly entry count, value of goods entered and duties paid, including the share tied to antidumping or other added duties.
• Who holds the customs broker license, how entries are reviewed before filing, and revenue by service.
• Your largest clients and the contract asking for $5M.
• Whether you pay duties for clients, and your terms and conditions, including any limitation of liability clause (a cap on what you owe a client).
• Loss runs (a report of past claims), penalty notices, and your current policy with its retroactive date.

What affects the cost?

• Goods, duty exposure and volume. High-duty goods and more entries usually cost more, because one mistake can repeat.
• How the $5M is built. The primary layer often costs more per $1M of limit than excess layers, though pricing varies by market and by account.
• Controls and claims history. Prior claims can raise prices.
• Retention and defense terms. A retention is the amount you pay on each claim before the policy pays, like a deductible. A higher one may lower premium.

Frequently asked questions

What kind of claim could reach $5M for a customs broker?

Hypothetically, a broker uses the wrong tariff code on a retailer's main product for two years. The claim would come from penalties, interest, lost refund rights and the client's losses across many entries. The duties themselves are often excluded or limited, so check the policy's duties and fees exclusion.

Do I need $5M Professional Liability as a customs broker if my client's contract says $5M?

Yes, if you want to meet the clause as written. A smaller policy, such as $1M, does not meet a $5M clause alone. Primary plus follow-form excess may meet it, so confirm that with the client. Request new quotes through Morrow for a higher primary limit or excess layers. Morrow can ask carriers to keep your retroactive date and prior acts coverage (coverage for work done before the new policy starts) where the market allows. Report anything that could become a claim to your current carrier before switching.

Can my client be listed as an additional insured?

Usually not. Professional Liability protects you against claims from clients. Some clients accept a certificate of insurance (a document that summarizes your coverage) listing every layer and its limit. Check your contract.

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.