$5M Professional Liability (E&O) Insurance for IT Consultants

For IT consultants whose client contract asks for $5M, Professional Liability can be one $5M primary policy or a smaller primary plus follow-form excess. It often needs a broker. Morrow can help you find it.

What does a $5M Professional Liability requirement mean for IT consultants?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your work or advice cost a client money. Many IT consultants buy it as Technology E&O, often combined with Cyber (coverage for data breaches and network attacks). See Technology E&O vs. Miscellaneous E&O. A $5M clause in a master services agreement (MSA, the main contract with a large client) may read like this:

• Per claim and aggregate: the most paid for one claim, and for all claims in a policy year.
• Tech E&O plus Cyber: the clause asks for both. Check whether $5M applies to each part or one shared limit.
• Primary plus excess: this clause lets you stack policies. If yours is silent, confirm with the client that primary plus follow-form excess meets the clause.
• Three years after the work: Professional Liability is almost always claims-made, which means it covers claims made while the policy is active. A clause like this may require every layer to stay in force, with the same retroactive date (the earliest work date it covers), for the full three years. Check your own contract wording.

Who asks IT consultants for $5M?

A $3M clause may fit mid-size clients, while $10M tends to appear in the largest enterprise and financial contracts. A client may ask for $5M when one mistake could stop its operations or expose sensitive data. It often comes from:

• Large enterprises whose vendor MSAs set $5M for firms with system access.
• Banks and insurers hiring you for core system or network work.
• Health systems that give you access to patient record systems.
• Prime contractors, the larger firms that hire you as a subcontractor and pass their own limit down to you.
• Public agencies that set the limit in a request for proposal (RFP).

How is $5M Professional Liability built?

A primary policy pays first. An excess policy pays only after the layers below it are used up. "$3M xs $2M" means a $3M layer that sits above the first $2M.

Each excess layer should follow form, meaning it uses the same terms as the primary policy. Every layer should share the same retroactive date, policy period and named insured (the business the policy covers). A commercial umbrella (a policy that adds limit over general liability and auto) almost never covers Professional Liability. See umbrellas and Professional Liability.

What will underwriters ask IT consultants for?

An underwriter decides whether to offer coverage and on what terms.

• Whether you only advise, or also run cloud migrations, ERP (business software) rollouts or managed support.
• Your admin access to client systems, and whether you run backups, patching or security tools.
• Your largest clients, their industries and the data in their systems.
• Your contracts: scope of work, uptime promises (service levels) and any limitation of liability clause (a contract term that caps what you owe a client).
• Your controls, such as multi-factor login, change approval and rollback plans.
• The $5M contract, revenue by service, loss runs (a report of past claims) and your current policy.

What affects the cost of $5M for IT consultants?

• Hands-on access. Running client systems usually costs more than advice alone.
• Client size and data. Finance and healthcare clients may mean larger potential losses.
• How the $5M is built. The primary layer often costs the most per $1M.
• Cyber and claims history. Matching Cyber limits or past claims can raise the price.

Frequently asked questions

Can an IT consulting mistake lead to a $5M claim?

Yes, a serious failure at a large client can lead to a claim near that size. Hypothetical example: an ERP rollout you lead goes live with a pricing error, and a distributor bills customers wrong for a month.

Is a $2M policy enough if my IT contract says $5M?

No, a $2M policy alone does not meet a $5M clause. Request new quotes through Morrow. The options are a new primary policy at a higher limit, or excess layers over a primary. Where the market allows, quotes can keep your retroactive date and prior acts coverage (cover for work done before the new policy starts). Report any known incident to your current carrier before you switch.

Can a small IT firm get $5M?

Possibly, but approval depends on underwriting. Underwriters look at revenue, advice versus hands-on work, client industry and claims history. A smaller firm may find a lower primary plus excess easier to place.

Can my client be added as an additional insured on Professional Liability?

Usually not. Professional Liability covers your own work, so naming a client as an insured rarely fits. Some Technology E&O policies may extend limited cover to a client for liability that comes from your services, depending on the carrier and your contract. It is not automatic and is often not possible on excess layers. A certificate of insurance (short proof of coverage) alone does not grant it.

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.