$2M Professional Liability (E&O) Insurance for Freight Brokers, Customs Brokers and Travel Firms

For freight brokers, customs brokers and travel firms whose client asked for $2M: it usually means the policy pays up to $2M per claim and $2M per year.

What does a $2M requirement mean for freight brokers, customs brokers and travel firms?

Professional Liability (E&O) covers claims that a mistake, a missed step or bad advice in your work cost a client money. E&O stands for Errors and Omissions. In a hypothetical case, a customs broker files the wrong tariff code and the importer sues over extra duties, penalties and delay costs. A shipper or importer agreement might read:

• Per claim and aggregate: the most the policy pays for one claim, and for all claims in one policy year. Here, $2M each.
• Certificate of insurance: a document that summarizes your coverage. It may show "$2M" while the policy pays less per claim, so the policy wording controls.
• 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 work date covered). A contract may also require an extended reporting period (extra time to report claims) after the work ends.

Who asks freight and travel firms for $2M?

Many clients ask for $1M (see $1M Professional Liability for logistics and travel firms). $2M is less common for this group, but you may see it from:

• Large shippers and manufacturers signing a broker-shipper agreement with a freight broker
• Importers with high-value or regulated goods hiring a customs broker
• 3PL (third-party logistics) and warehouse operators hiring logistics consultants for network or software projects
• Corporate travel buyers choosing a travel management company

How is $2M built?

Many $2M programs are one primary policy (the policy that pays first) written at $2M/$2M. Others are a $1M primary policy plus a $1M excess layer (a second policy that sits above it). Compared with $1M, $2M doubles what one claim can pay, which matters for high-value freight or customs entries. The excess should follow form, meaning it uses the primary policy's terms. Confirm with the client that primary plus follow-form excess meets the clause. If a client wants more, see $3M Professional Liability for logistics and travel firms.

Already carry $1M? Request new quotes through Morrow, as a new primary policy or an excess layer. Morrow can ask the market to keep your retroactive date and prior acts coverage (cover for earlier work) where it allows. A commercial umbrella almost never covers Professional Liability, so it usually cannot help you reach $2M (see Does a commercial umbrella cover Professional Liability?).

What will underwriters ask for?

An underwriter is the person at the insurance company who decides whether to offer coverage and on what terms.

• A completed application listing each service, such as brokerage, customs entry filing, forwarding or travel booking
• Revenue or gross bookings, and your largest clients
• For freight brokers, how you vet and monitor carriers
• For customs brokers, how entries are reviewed before filing and who holds the license
• For travel firms, how you handle client deposits, supplier failures and trip changes
• The contract asking for $2M, loss runs (a report listing past claims) for three to five years, and your current policy

What affects the cost?

• Your type of work. Customs entries and high-value freight often carry larger losses than leisure bookings.
• Revenue and client mix. Large accounts can mean larger claims.
• Claims history. Past claims can raise the price or narrow your options.
• Retention. This is the amount you pay per claim before the policy pays. A higher retention usually lowers premium (the price of the policy).
• Defense terms. Many policies pay defense costs (legal fees to fight a claim) inside the limit, which leaves less for a settlement.

Frequently asked questions

Do I need $2M Professional Liability as a freight broker or travel firm?

Usually only if a contract or client requires it. Many clients ask for $1M, and $2M is a less common ask from large shippers, importers and corporate travel buyers. Logistics consultants who mainly build or run software for clients may be placed with Technology E&O (coverage written for software and tech services) instead.

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

Usually not if the clause says $2M per claim. A $1M/$2M policy pays at most $1M on any one claim. Send your contract to Morrow to review.

Can my client be added as an additional insured on my $2M Professional Liability?

Usually not. An additional insured is a party added to your policy so it has its own coverage rights. Most Professional Liability policies do not let you add a client this way. A certificate holder (a party that only receives a copy of your certificate) gets no coverage rights.

Does Professional Liability cover lost or damaged freight?

Usually not. The motor carrier's cargo policy generally handles physical loss. Professional Liability is aimed at financial loss from errors in your service. Freight brokers may also need contingent cargo (cover for freight loss when the carrier's cargo policy does not pay) and contingent auto liability (cover for carrier accidents when the carrier's auto policy does not pay).

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.