$2M Professional Liability (E&O) Insurance for Independent Paralegals

For independent paralegals told to carry $2M: you need a $2M per claim limit in Professional Liability, usually $2M/$2M, and a $1M/$2M policy may not meet it.

What does a $2M 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 $2M clause in a paralegal services agreement might read like this:

• Per claim: the most the policy pays for any one claim. Here, $2M.
• Aggregate: the most the policy pays for all claims in one policy year. A $1M/$2M policy pays only $1M per claim, so it does not meet this clause. See Professional Liability limits explained.
• 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 date of work the policy covers).
• After the work ends: the clause asks you to keep coverage for two years. Renewing with the same retroactive date may handle that. A tail (extra time to report claims after the policy ends) may also be an option, depending on the carrier.

Who asks independent paralegals for $2M?

Solo freelance paralegals are often asked for $1M (see $1M Professional Liability for independent paralegals). $2M tends to come up when the client or the matter is larger:

• Mid-sized and large law firms with standard vendor agreements for all contract staff.
• Corporate legal departments hiring outside help for contracts, compliance or litigation holds.
• Government agencies, where the limit may be written into the request for proposal (RFP). See government contract requirements.
• Legal staffing and outsourcing firms that pass their own client terms down to you.

How is $2M built?

At $2M, the limit is usually one primary policy (the policy that pays first) written at $2M/$2M. Independent paralegals usually buy a form called Miscellaneous Professional Liability, made for service businesses without their own policy type. Attorneys buy lawyers professional liability instead, which is a different form.

If you store client data for e-discovery or records work, you may also want to ask about Technology E&O (for technology services and software errors) and Cyber (for data breaches and privacy claims). If a contract asks for more than $2M, the next step is usually primary plus follow-form excess (extra limit that follows the primary policy's terms), which often needs a broker. Morrow can help you find it.

A commercial umbrella almost never covers Professional Liability, so it usually cannot help you reach $2M. Clients are usually not added to Professional Liability as an additional insured (someone covered under your policy). Some carriers may add one, often with limits on the wording, and many do not. Check whether your contract actually requires it.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. For paralegals, they usually ask about:

• Your services and the share of revenue from each, such as drafting, legal research, e-filing, docketing, document review or deposition summaries.
• Whether you work only under attorney supervision or also serve the public. Document preparation and immigration form services for the public may be restricted or regulated by state law, and underwriters may look at them more closely.
• Your clients by type (law firms, legal departments, agencies) and your largest contracts.
• How you track deadlines, check work, protect confidential files and secure client data.
• Revenue, prior claims, and your current policy and retroactive date.

What affects the cost?

• Type of work. Deadline-driven filing work may be viewed as higher risk than research.
• Who you serve. Supervised work for attorneys is often viewed differently than work for the public.
• Revenue and contract size. Bigger matters mean bigger possible losses.
• Claims history. Prior claims can raise the price.
• Retention and defense terms. A higher retention (what you pay on each claim before the policy pays) usually lowers premium. Defense outside the limit usually costs more.

Frequently asked questions

What kinds of claims could an independent paralegal face?

Claims usually say a mistake in your work caused a financial loss. Hypothetical examples: a docketing error causes a missed filing deadline, or a privileged email is left in a document production. The policy usually pays your defense on a covered claim.

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

No, not if the clause says $2M per claim. A $1M/$2M policy pays up to $1M per claim, so it may not meet the clause. Your contract sets the number you need.

I have a $1M policy and my contract asks for $2M. What do I do?

Ask Morrow to request new quotes for a $2M/$2M policy, keeping 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 so there is no gap. Report anything that could become a claim to your current carrier first.

Does the law firm's insurance cover my work as a contract paralegal?

It may not. A firm's lawyers professional liability policy is written for the firm and its people. Whether an outside contractor is covered depends on that policy's wording, so firms often ask you to carry your own.

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.