$1M Professional Liability (E&O) Insurance for Interior Designers

A $1M requirement means your Professional Liability (E&O) policy can pay up to $1M for a covered claim that your design work caused a client a financial loss. This guide is for interior designers asked for proof.

What does a $1M requirement mean for interior designers?

A $1M requirement means the client wants proof that your Professional Liability (E&O, short for Errors and Omissions) policy can pay up to $1M for a claim that your design advice or plans caused a financial loss. A typical clause looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• 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 does.
• Claims-made: the policy covers claims made and reported while it is active, for work done on or after the retroactive date (the earliest date of work the policy covers).
• After completion: you may need to keep coverage for years after substantial completion (when the project is ready to use), since problems often show up after move-in.

See Professional Liability limits explained.

Who asks interior designers for $1M?

Commercial clients most often ask for $1M, and some smaller residential projects may not ask for proof of coverage. Requirements vary. Requests may come from:

• Developers hiring you for lobbies and amenity spaces.
• Property owners and managers refreshing lobbies and shared areas in several buildings.
• Hotel, restaurant and office tenants doing a fit-out (building out leased space).
• Architects and design-build contractors who hire you under their contract and often pass their insurance terms down to you.
• Healthcare, senior living or larger hospitality projects, which may ask for more.

How is $1M built?

A $1M limit is usually one primary policy (the policy that pays first). Interior designers are often written on a design professional or interior designer form. Some are placed on a Miscellaneous Professional Liability form (a general form for service professionals), depending on the carrier and the services you perform. Firms that prepare construction documents (the detailed drawings contractors build from) may be written in the architects and engineers (A&E) market instead.

If the contract asks for $2M, a $1M policy does not meet it. See $2M Professional Liability for interior designers, where some buyers add a follow-form excess layer (extra limit that follows the primary policy's terms).

A commercial umbrella almost never covers Professional Liability, so it usually cannot help you reach the limit. Clients usually cannot be added as an additional insured (a person or company given rights under your policy) on Professional Liability. Some forms may allow it as an added policy term, usually limited to the client's liability from your services and often at extra cost. Many clients accept a certificate of insurance (a one-page coverage summary) instead.

What will underwriters ask for?

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

• Your split between residential and commercial work.
• Whether you prepare floor plans or construction documents, and who checks them against building codes.
• Whether you buy furniture and finishes for clients, and how you handle deposits.
• Your largest projects, typical fees and written contracts.
• Prior claims, possible claims, and your current policy and retroactive date.

What affects the cost?

• Type of work. Commercial, hospitality and healthcare projects usually cost more than residential decorating.
• Scope of services. Space planning, code-related layouts and buying furniture for clients add risk.
• Revenue, project size and claims history. Larger fees and prior claims can raise the price or narrow options.
• Aggregate, retention and defense terms. A higher aggregate usually costs more. A higher retention (the amount you pay on each claim before the policy pays) usually lowers the premium.

See what drives Professional Liability cost.

Frequently asked questions

Do I need $1M Professional Liability (E&O) as an interior designer?

Often only if a client contract or project requires it, and some smaller residential projects may not. Commercial clients and design-build firms are more likely to ask, so check each contract.

Does General Liability cover design mistakes for interior designers?

Usually not. General Liability covers bodily injury and property damage. Hypothetical example: a designer specifies a carpet that does not meet a hotel's fire rating, and the owner pays to replace it. That financial loss usually falls under Professional Liability.

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 through Morrow. Morrow can ask that your retroactive date and prior acts coverage be kept where the market allows. Ask Morrow about timing to avoid a gap, though that depends on policy terms and underwriting. Report anything that could become a claim to your current carrier before that policy ends.

What happens to my coverage if I close my interior design firm?

On a claims-made policy, a claim first made after the policy ends is usually not covered, unless an extended reporting period applies. Tail coverage (an extended reporting period) may give you extra time to report claims about past work, depending on the policy and the insurer.

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.