$5M Professional Liability (E&O) Insurance for E-discovery Vendors

E-discovery vendors usually need $5M of Professional Liability (E&O) when a large client or matter requires it, often built as a primary policy plus follow-form excess.

What does a $5M requirement mean for e-discovery vendors?

Professional Liability (E&O, for Errors and Omissions) covers claims that a mistake in your services cost a client money. A $5M vendor clause might read:

• Per claim and aggregate: the most paid for one claim, and for all claims in one policy year.
• 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 work date the policy covers).
• Primary plus excess: this sample allows stacked policies. If your clause is silent, confirm with the client that primary plus follow-form excess meets the clause.
• After the last production: you would usually renew every layer for the required period, or buy an extended reporting period (extra time to report claims) if you do not renew.

Who asks e-discovery vendors for $5M?

Some e-discovery contracts ask for $1M to $3M (see $3M for e-discovery vendors). $5M tends to show up when one error could be very costly. Some very large matters ask for more (see $10M for e-discovery vendors). Common triggers:

• Large law firms handling big group lawsuits through your platform
• Large corporate legal departments signing multi-year service contracts
• Government and court contracts, where the request for proposal (RFP) often sets the limit
• Matters involving health, financial or personal data

Picture a hypothetical claim. A review step misses privileged (legally protected) files in a huge production, and the law firm spends months asking the court to get them back.

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 above the first $2M.

Each excess layer should follow form, meaning it adopts the primary policy's terms. Every layer should share the same retroactive date and policy period. Many Professional Liability policies pay defense costs inside the limit, so check that each layer treats defense the same way.

Vendors that host or process client data often buy Technology E&O (coverage for errors in technology services), sometimes paired with Cyber (coverage for data breaches and related costs; see Technology E&O vs. Miscellaneous E&O). Already carry a lower limit? Request new quotes through Morrow, as a new $5M primary or as excess layers. Ask that your retroactive date carry over, so past work stays covered, where the market allows.

What will underwriters ask for?

An underwriter (who decides whether to offer coverage) may review:

• Revenue by service, such as collection, processing, hosting and review
• Your largest matters, contract values and peak data hosted
• Your platform or third-party cloud, plus encryption, multi-factor sign-in and audits
• Privilege and redaction checks, how you track who handled each file (chain of custody), and sign-off before a production goes out
• Attorney supervision of review teams, and how you vet subcontracted reviewers
• The contract asking for $5M, your standard client agreement, three to five years of loss runs (a report of past claims), and your current policy with its retroactive date

What affects the cost?

• Service mix and matter size. Hosting and review on large matters usually cost more than collection alone.
• Data volume and sensitivity. More hosted data, or regulated data, can raise the cost of a single error.
• How the $5M is built. The primary layer often costs the most per $1M of limit, and excess layers are often priced lower per $1M.
• Claims history. Past claims can shrink the limit offered and raise the price.
• Retention and defense terms. Retention is what you pay per claim before the policy pays, like a deductible. A higher one usually lowers cost.

Frequently asked questions

Can a small e-discovery firm get $5M Professional Liability?

It may be possible, but it is not certain. Carriers size the limit to revenue, data volume and largest matters, so small firms may be offered less. It is often built as a $1M or $2M primary plus excess. A commercial umbrella almost never covers Professional Liability (read more on umbrellas). Because $5M is very rare online, a broker is almost always needed. Morrow can help you find it.

Is $3M enough if my e-discovery contract says $5M?

No. If the contract says $5M, a $3M policy does not meet it. A $2M excess layer above a $3M primary would reach $5M if the layers follow form. Confirm with the client that primary plus follow-form excess meets the clause. Morrow can help you find it.

Can the law firm be added as an additional insured?

Usually not. Professional Liability covers your own errors, and carriers rarely add a client to it. A few may allow it in limited cases, but do not count on it. Some clients accept a certificate of insurance (a one-page proof of coverage) listing every layer.

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.