$1M Professional Liability (E&O) Insurance for Fundraising Consultants

For fundraising consultants asked by a nonprofit client for proof of coverage, $1M Professional Liability (E&O) means the policy pays up to $1M per claim for covered errors in your services.

What does a $1M requirement mean for fundraising consultants?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your advice or services caused a client a financial loss. A fundraising services agreement might read:

• Per claim: the most the policy pays for any one claim. Here, $1M (see Professional Liability (E&O) limits explained).
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. A $1M/$1M policy does not meet this clause. A $1M/$2M policy meets either wording. Not every carrier writes a separate aggregate, so $2M aggregate may need a higher per-claim limit.
• Claims-made: the policy covers claims made and reported while it is active, for work on or after the retroactive date (the earliest work date it covers). The clause also names your services, and your policy should match them.

Who may ask fundraising consultants for $1M?

• Hospitals, universities and private schools may ask for a limit when hiring campaign counsel.
• Museums, arts groups and human services nonprofits may include a limit for a capital campaign.
• Community foundations and other grantmakers may ask for one when hiring grant help.
• Government agencies and school districts that hire grant writers may include one (see Professional Liability for government contracts).
• Some smaller nonprofits may not ask for a limit. When one does, the amount varies by client and contract, and $1M is one you may see.

How is $1M built?

At $1M, the limit is usually one primary policy, the policy that pays first. A $2M requirement, which large multi-year campaigns may ask for, may be met by a higher primary limit or by primary plus follow-form excess (extra limit on top that follows the primary's terms). See $2M Professional Liability for fundraising consultants. Fundraising consultants often buy Miscellaneous Professional Liability, a form for advice firms that fit no more specific profession's form.

A commercial umbrella (an add-on policy that sits above other policies) almost never covers Professional Liability. Additional insured status (being added to your policy as a covered party) is not built into most Professional Liability policies, and some carriers may add a client only in limited cases. A certificate of insurance, a one-page summary showing you carry the coverage, does not give the client rights under the policy.

What will underwriters ask for?

Underwriters often ask what you do, how you are paid and what your contracts promise. An underwriter is the person at the insurer who decides whether to offer coverage. They often ask:

• Your services and revenue share for each, such as campaign counsel, grant writing or donor database work.
• Whether you only advise, or also solicit gifts or handle donor money.
• How you are paid: flat fee, retainer, or share of funds raised.
• Whether contracts promise a dollar goal or grant award.
• Your largest clients, contract size, and any government or federal grant work.
• Prior claims, possible claims, and your current policy and retroactive date.

What affects the cost?

• Services mix. Advice-only work often rates differently than work touching donor funds or federal grants.
• Revenue and campaign size. Larger campaigns mean larger possible losses.
• Contract terms. Promised outcomes and broad indemnity wording (a promise to cover the client's losses) can make underwriters cautious.
• Aggregate and retention. $1M/$2M usually costs more than $1M/$1M. A higher retention (what you pay on each claim before the policy pays) usually lowers the premium.
• Claims history and prior acts. Past claims can raise the price. Prior acts coverage (for work done before the policy starts) can add cost.

Frequently asked questions

What claims could a fundraising consultant face?

Claims usually say your advice or services caused a client a financial loss. Here are a few hypothetical examples. A client says your feasibility study overstated donor capacity. A grant writer misses a federal deadline. A policy may pay defense costs on a covered claim, even one without merit. Many policies count defense costs inside the limit, which leaves less to pay a settlement. Many also exclude promised results, so a contract that promises a dollar goal can affect coverage.

Do I need $1M Professional Liability as a fundraising consultant?

It depends on your contract and your work. $1M is a limit some clients ask for. Your contract sets the limit you need, so check its insurance clause.

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

No, a $1M/$1M policy does not meet a $1M/$2M clause. You can request new quotes for a $1M/$2M policy. Morrow can request quotes and ask the market to keep your retroactive date and prior acts coverage where it allows. Many people keep the current policy in force until a new one starts. It is wise to report anything that could become a claim to your current carrier before the policy ends. Check your policy wording for reporting rules.

Do I still need coverage after my fundraising campaign ends?

Often yes, because a claim first made after a claims-made policy ends is generally not covered. A tail, or extended reporting period, gives extra time to report claims about past work. See tail coverage explained.

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.