$2M Professional Liability (E&O) Insurance for Forensic Accountants

For forensic accountants, a $2M requirement usually means a policy with a $2M limit per claim, often written as $2M/$2M, which a $1M/$2M policy may not meet.

What does a $2M requirement mean for forensic accountants?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your professional work caused a client a financial loss. A $2M clause might read like this:

• Per claim: the most the policy pays for any one claim. See Professional Liability limits explained.
• Aggregate: the most the policy pays 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 on or after the retroactive date (the earliest date of work covered).
• Named services: a clause like this may expect the policy to describe investigations and testimony, not just tax or bookkeeping work.

Who asks forensic accountants for $2M?

Some forensic engagements that ask for insurance ask for $1M (see $1M Professional Liability for forensic accountants). $2M is higher and often appears when the money at stake is larger:

• Large companies and audit committees hiring you to investigate suspected fraud.
• Insurers placing you on a panel (an approved list of outside reviewers) to review large claims, such as lost income after a shutdown.
• Banks and other lenders asking you to review a troubled borrower's books or trace missing collateral.
• Bankruptcy trustees and receivers, where your work supports recovery claims.
• Government agencies buying investigative or audit support.

How is $2M built?

At $2M, the limit is usually one primary policy (the policy that pays first) written at $2M/$2M. A $1M primary policy plus a $1M excess layer (extra limit that sits above the primary and pays after it) may also work in some cases. The excess should follow form, meaning it uses the same terms as the primary. Confirm with the client that primary plus follow-form excess meets the clause.

CPA firms usually buy accountants professional liability. Fraud examiners and investigators who are not CPAs often buy Miscellaneous Professional Liability, a form for service businesses that have no policy type of their own. A commercial umbrella almost never covers Professional Liability, so it usually cannot fill the gap. Clients usually cannot be added to this policy as an additional insured (a party covered under your policy). Many accept a certificate of insurance (a one-page proof of coverage) instead.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. Expect questions like these:

• Your revenue split across fraud investigation, damages and lost profits work, courtroom testimony, valuation, and any tax or bookkeeping.
• Who hires you directly, and how often you work for plaintiffs versus defendants.
• How often you have testified, and whether a court ever limited your opinion.
• The dollar size of your largest matters, and whether your investigations name individuals as wrongdoers.
• How reports are reviewed, how you run conflict checks, and whether every matter has an engagement letter.
• Prior claims, any matter that could become a claim, and your current policy and retroactive date.

What affects the cost?

• Mix of services. Testimony and investigations that accuse people may be rated differently than valuation or tax work.
• Matter size. Bigger disputes mean bigger possible claims.
• Claims history. Prior claims can raise the price or narrow your options.
• Retention and defense terms. A retention is the amount you pay on each claim before the policy pays, like a deductible. It and the way defense costs are handled both change the price.

Frequently asked questions

I carry $1M as a forensic accountant. How do I get $2M Professional Liability?

You can send Morrow your current policy, and Morrow can request quotes for a new $2M policy. Morrow can ask carriers to keep your retroactive date and prior acts coverage (cover for work done before the new policy starts) where the market allows. Keep your current policy until the new one starts, and report anything that could become a claim to your current carrier first. See retroactive dates explained.

Is $1M/$2M enough if my engagement letter says $2M?

Usually not. A $1M/$2M policy pays $1M per claim, so it may not meet a $2M per claim clause. Check the clause wording and ask Morrow to review it.

What kind of claims can forensic accountants face?

Often the claim comes from your own client after a case or recovery goes badly. Hypothetical examples: a damages model with a formula error, or a report that misses key transactions. Coverage depends on your policy wording.

Is $2M enough for a very large dispute?

It may be, but some large corporate or government matters ask for more. See $3M Professional Liability for forensic accountants.

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.