Forensic accountants asked for $5M in Professional Liability (E&O) by a board, lender or law firm often meet it with one $5M primary policy or a smaller primary plus follow-form excess.
The short answer
- A $5M requirement means your Professional Liability pays up to $5M for one claim and $5M in total for the policy year, and many policies count defense costs inside that limit.
- It may be one $5M primary policy, or more often a $1M or $2M primary plus follow-form excess layers.
- $5M is very rare online and almost always requires a broker. Morrow can help you find it. It may come from an accountants program or the excess and surplus lines market, which handles risks standard insurers decline.
What does a $5M requirement mean for forensic accountants?
Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a financial loss. A $5M clause might read like this:
Illustrative contract wording
Consultant shall maintain Professional Liability insurance covering forensic accounting and litigation support services, with limits of not less than $5,000,000 per claim and $5,000,000 in the aggregate. If claims-made, the retroactive date shall be no later than the start of the engagement, and coverage shall be maintained for five (5) years after the final report. Limits may be met through primary and excess policies.
Illustrative example only. Your contract controls.
- Per claim and aggregate: the most paid for one claim, and for all claims in a year. See how limits are written.
- Claims-made: the policy covers claims made and reported while it is active, for work after the retroactive date (the earliest date of work it covers). See claims-made vs. occurrence.
- Five years after the report: you would usually need to keep every layer in force. If you stop renewing, you may be able to buy an extended reporting period (tail coverage, extra time to report claims), depending on carrier terms and your contract.
- Primary plus excess: the last sentence allows stacking. If your clause is silent, confirm with the client that primary plus follow-form excess meets it.
Who asks forensic accountants for $5M?
Many forensic engagements ask for $1M or $2M. $3M is on the higher end. $5M appears when stakes are very large:
- Counsel for public company board or audit committees investigating suspected accounting fraud.
- Banks and lender groups relying on your review of a borrower's books.
- Large law firms hiring you to calculate damages in major disputes.
- Insurers using you on large theft or lost-income claims.
- Private equity buyers hiring you for fraud due diligence.
- Government agencies buying fraud recovery support.
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. Compared with $3M, a $5M requirement more often needs two or three layers, so more underwriters review your firm.
Example A: single policy
Example B: two layers
Example C: three layers
Each excess layer should follow form, meaning it adopts the primary policy's terms. Every layer should share the same retroactive date, policy period and named insured (the business the policy covers). Confirm each layer treats defense costs alike. A commercial umbrella almost never covers Professional Liability.
CPA firms usually buy accountants professional liability, often through CPA programs. Non-CPA investigators usually buy Miscellaneous Professional Liability (a general form for advisory work not tied to one licensed profession).
Good to know
A hypothetical example. A lender group hires you to test a borrower's receivables. You miss a pattern of fake invoices. The lenders advance more money, the borrower fails, and they sue you. If defense costs sit inside the limit, years of litigation can use up much of the $5M before any settlement or judgment is paid.
What will underwriters ask for?
An underwriter decides whether to offer coverage and on what terms.
- Revenue split by service: fraud, damages, testimony, lender reviews, tax.
- Your largest matters: amounts at stake and who hired you.
- Whether your reports are filed in court or used by lenders, buyers or investors who rely on them.
- Whether you act as a receiver, monitor or trustee, or do tax work, which some policies exclude.
- The contract requiring $5M, three to five years of loss runs (reports of past claims), and your current policy.
What affects the cost?
- Mix of services. Fraud, damages and tax work may be rated differently.
- Matter size and reliance. Bigger matters mean bigger possible losses.
- How the $5M is built. The primary layer often costs the most per $1M of limit.
- Claims history. Prior claims can raise the price or shrink the limit offered.
- Retention and defense terms. A higher retention (the amount you pay per claim, like a deductible) usually lowers premium.
Frequently asked questions
Can a small forensic accounting firm get $5M in Professional Liability?
Sometimes, but it is not assured. Underwriters weigh revenue, matter size, services and claims history, and a small firm may be offered less than $5M. When available, it is usually a $1M or $2M primary plus excess.
I already have a $1M or $2M policy as a forensic accountant. How do I get to $5M?
Request new quotes through Morrow, for a new $5M primary or for excess layers above a primary. Morrow can request quotes that keep your retroactive date and prior acts coverage (coverage for past work) where the market allows. Report anything that could become a claim to your current carrier before you switch.
Can my client be added as an additional insured on my $5M Professional Liability?
Usually not. Many Professional Liability policies do not offer additional insured status (covering another party, such as a client, under your policy). Where offered, it is often limited. A certificate of insurance (a one-page summary of your coverage) listing every layer often meets the need. Check your contract.
Looking for $5M in Professional Liability? Morrow can help.
Send us the insurance requirement from your contract and your current policy. Morrow can review both and request quotes for a $5M primary or a primary plus excess, keeping your retroactive date where the market allows.
Morrow · 25 New Chardon Street, 4th Floor, Boston, MA 02114
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.