$1M Professional Liability (E&O) Insurance for E-discovery Vendors

For e-discovery vendors whose client contract asks for $1M, Professional Liability (E&O) pays for claims that a mistake in your services caused a financial loss.

What does a $1M requirement mean for e-discovery vendors?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your services caused a client a financial loss. For an e-discovery vendor, that could be private attorney-client emails sent to opposing counsel. A typical clause looks like this:

• Per claim: the most the policy pays for any one claim.
• Aggregate: A $1M/$1M policy would not meet the limits in this sample clause. A $1M/$2M policy would match its limits. Your contract may ask for more, so check its exact wording.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done on or after the retroactive date (the earliest date of work the policy covers).
• Listed services: a service left off the application, such as forensic collection, may not be covered.

Who asks e-discovery vendors for $1M?

$1M is a limit some clients ask e-discovery vendors for. You may see it from:

• Small and mid-sized law firms sending out processing, hosting or production work.
• Corporate legal departments on a single matter.
• Courts and agencies buying records, scanning or review support.
• Larger e-discovery providers that subcontract collection or review work to you.

Big litigation, large company contracts and sensitive data hosting often ask for more. A $2M clause is not met by a $1M/$2M policy, because $1M/$2M caps any one claim at $1M. See $2M Professional Liability for e-discovery vendors.

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first), with no excess layers (extra policies that add limit above the first one) stacked above it. A $2M ask usually means a higher primary limit or an excess layer that follows form (matches the primary policy's terms). Many e-discovery vendors buy Technology E&O, often packaged with Cyber, because their work runs on software and client data. A firm that only does review or records work may buy Miscellaneous Professional Liability (a general form for non-technology services) instead (see Technology E&O vs Miscellaneous E&O). Attorneys who give legal advice usually buy lawyers professional liability, a different policy.

Before you accept a quote, check the policy form. Does it cover data handling? Does it match the clause? A commercial umbrella almost never covers Professional Liability.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. For e-discovery work, they usually ask about:

• Your services, revenue, largest clients and data volume.
• Quality control steps before a production goes out, and security controls such as multi-factor login and encryption.
• Prior claims, anything that could become a claim, and your current policy and retroactive date.

What affects the cost?

• Services mix. Forensic collection may cost more than scanning alone.
• Revenue and data volume. More matters and hosted data mean more chances for a claim.
• Claims and incidents. Prior claims can raise the price or narrow options.
• Security controls. Strong controls often help.
• Aggregate, retention and defense terms. $1M/$2M 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 an e-discovery vendor?

Yes, if your contract asks for it. The contract decides the limit. If you host client data, the contract may also ask for Cyber, which covers costs from a data breach, such as notifying people and restoring systems.

What claims could an e-discovery vendor face?

Made-up examples: A search filter leaves out one employee's emails, and the client misses a court deadline. A redaction fails, and private documents reach the other side. A forensic collection cannot be tracked, and key evidence is thrown out. A data breach on your review platform is usually handled under Cyber (and sometimes Technology E&O), not a Miscellaneous Professional Liability form (see Professional Liability vs Cyber).

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

No, the aggregate is lower than the clause asks for. Request new quotes for a $1M/$2M policy. Morrow can ask carriers to keep your retroactive date and prior acts coverage (coverage for past work before the new policy starts) where the market allows. Keep your current policy in force until the new one starts, and report known incidents to your current carrier first.

Can a law firm be added as an additional insured on my Professional Liability?

Usually not. An additional insured is an outside party given rights under your policy. Most Professional Liability policies do not allow it. Clients often accept a certificate of insurance instead, a one-page summary of your coverage and limits that gives the holder no rights under the policy.

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.