$1M Professional Liability (E&O) Insurance for Independent Paralegals

For independent paralegals whose contract asks for $1M: it means Professional Liability (E&O) that pays up to $1M per claim for covered mistakes in your work, often with a $1M or $2M yearly cap.

What does a $1M requirement mean for independent paralegals?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a financial loss. A typical contract paralegal clause looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most it pays for all claims in a policy year. This clause accepts $1M/$1M. A $2M aggregate would need $1M/$2M.
• Claims-made: Professional Liability almost always works this way. It pays only for claims made while the policy is active, for work on or after the retroactive date (the earliest work date it covers). That is why the clause asks for coverage after your last assignment.

See also Professional Liability limits explained.

Who asks independent paralegals for $1M?

You may see $1M in contracts from:

• Small and mid-sized law firms that hire you for overflow work.
• Solo attorneys who want outside help.
• Corporate legal departments that need document review.
• Legal staffing agencies that place you with law firms.

Many solo and small-firm jobs set no insurance requirement. Some clients ask for $2M when matters are larger. A $2M limit replaces $1M. It does not add to it (see $2M Professional Liability for independent paralegals). If you prepare forms for the public instead, see $1M Professional Liability for legal document preparers.

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 sit on top of the first one). Independent paralegals often buy Miscellaneous Professional Liability, a form for service businesses without their own policy type, or a paralegal or legal-services Professional Liability form where a carrier offers one. Attorneys buy lawyers professional liability. Technology E&O (coverage for errors in tech services) fits only if you sell technology.

A commercial umbrella almost never covers Professional Liability. Adding a client as an additional insured (a person or company added to your policy so it can also be covered) is not automatic on Professional Liability, and many policies do not allow it. Some carriers may allow it for liability arising from your services, so check what your contract requires and ask when you request quotes. Many clients accept a certificate of insurance (a one-page summary of your coverage) as proof.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. For independent paralegals, they usually ask:

• Do you work only under an attorney's supervision, or also serve the public, such as with immigration or self-help forms? List every service you provide.
• Your practice areas, such as litigation or real estate, with a rough share of revenue.
• Whether you enter court deadlines or file documents, and how you check them.
• Your revenue, and whether you use signed engagement letters.
• How you store client files. Ask Morrow about Cyber (coverage for data breaches).
• Prior claims, possible claims, and your current policy and retroactive date.

Morrow can review your contract and policy side by side. Possible gaps are a $1M aggregate where the contract wants $2M, a service such as docketing the policy does not list, or a retroactive date that leaves past work uncovered. Another is an exclusion (work the policy will not cover), such as an exclusion for unauthorized practice of law, which can apply to work done without attorney supervision.

What affects the cost?

• Supervision. Work under an attorney usually looks lower risk than work for the public.
• Practice area. Underwriters may view deadline-heavy litigation differently from research.
• Claims history. Prior claims can raise the price or narrow options.
• 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) usually lowers the premium.

See also what drives Professional Liability cost.

Frequently asked questions

Do I need $1M Professional Liability as an independent paralegal?

Some law firms and staffing clients ask for it, particularly larger firms and agencies, so check the insurance section of your contract. Many engagements set a lower limit or no requirement.

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

No, because a $1M aggregate falls short of a $2M aggregate. Morrow can request quotes for a $1M/$2M policy and ask insurers to keep your retroactive date and prior acts coverage (coverage for earlier work) where the market allows. Keep your current policy until the new one starts, and report known incidents to your current carrier first.

Why do I need my own policy if I work under an attorney?

The firm's policy may not cover you as a contractor. A law firm's malpractice policy may not extend to outside contractors, so coverage for you depends on its wording. That is why many firms ask you to carry your own.

What kind of claim could an independent paralegal face?

Two hypothetical examples: you enter a court deadline on the wrong date and the attorney misses it, or you send a privileged document to opposing counsel by mistake. A policy may pay to defend a covered claim, subject to its terms.

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.