$1M Professional Liability (E&O) Insurance for Data Analytics Firms

For data analytics, business intelligence (BI) and data engineering firms, $1M in Professional Liability (E&O) means a policy that pays up to $1M per claim for covered client losses from your errors.

What does a $1M requirement mean for data analytics firms?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a financial loss. For an analytics firm, think of a broken pipeline or a flawed model. A typical clause looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. Some policies set one aggregate equal to the per-claim limit. If so, a $2M aggregate may need a $2M limit. See Professional Liability limits explained.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work after the retroactive date (the earliest work date covered). Clauses ask you to keep coverage after work ends.
• "Network security and privacy": this is Cyber coverage. If you store or move client data, a plain E&O policy may not meet a clause that names it.

Who asks data analytics firms for $1M?

You will often see $1M from:

• Mid-sized companies hiring you to build dashboards or a data warehouse.
• Marketing and sales teams buying attribution, customer analytics or CRM data work.
• Clinics and smaller healthcare providers sharing patient or claims data. Larger systems and health plans often ask for higher limits.
• Software firms and consultancies subcontracting data engineering or data science work to you.

Enterprise MSAs (master service agreements) often ask for $2M instead, usually because of the data you handle. A $2M limit doubles what is paid per claim, while a $1M/$2M split only raises the yearly total. See $2M Professional Liability for data analytics firms.

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first), with no excess layers (extra policies above it). Analytics firms often buy Technology E&O, a form built for software, data and IT services, rather than Miscellaneous Professional Liability. It is often packaged with Cyber, which covers breaches, network attacks and privacy claims. See Professional Liability vs. Cyber.

A commercial umbrella almost never covers Professional Liability (see Does an umbrella cover Professional Liability?). Standard Professional Liability forms do not name clients as additional insureds (parties the policy also protects). Some Technology E&O carriers will add a client, often for an added charge and usually only for liability that arises from your services. Check whether your contract requires it, and ask Morrow to request quotes that offer it. Many clients accept a certificate of insurance (a one-page proof of coverage) instead.

What will underwriters ask for?

An underwriter is the person at the carrier who decides whether to offer coverage and on what terms. They usually ask for:

• Each service you offer, such as BI, data engineering, data science or data hosting, with a rough share of revenue.
• Revenue, largest clients and typical project size.
• Whether you store, host or process client data, how many records, and whether they are personal, health or financial.
• Whether you work inside client production systems.
• Security habits, such as multi-factor login, encryption and backups.
• Prior claims, possible claims, and your current policy and retroactive date.

What affects the cost?

• Type of work. Models that drive pricing, lending or clinical decisions may cost more than marketing dashboards.
• Data you hold. More or more sensitive records usually raise the price, especially with Cyber.
• Revenue and client mix. Bigger contracts and regulated clients mean bigger possible losses.
• Claims history. Prior claims can raise the price or narrow options.
• Limits and retention. A higher limit or aggregate usually costs more than $1M/$1M. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) usually lowers the premium.

Frequently asked questions

Do I need $1M Professional Liability as a data analytics firm?

Your contract decides, and many clients ask for $1M, especially if you store or move their data. Check it for the per-claim limit, the aggregate and any Cyber wording.

Do I need Cyber as well as Technology E&O?

If you store, host or move client data, many clients expect both. If the contract names network security or privacy liability, ask Morrow to request quotes for both.

Is $1M/$1M enough if my contract says $1M/$2M?

Usually not as written. Ask Morrow to request quotes that meet the $2M aggregate, which may mean a $2M limit. Quotes can aim to keep your retroactive date and prior acts coverage (cover for past work done before the new policy starts) where the market allows. Keep your current policy in force until the new one starts so there is no gap. Report anything that could become a claim to your current carrier before switching.

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.