$3M Professional Liability (E&O) Insurance for Freight Brokers, Customs Brokers and Travel Firms

Freight brokers, customs brokers and travel firms can usually meet a $3M requirement with one $3M primary policy, or a primary policy plus an excess layer.

What does a $3M requirement mean for logistics and travel firms?

Professional Liability (E&O, for Errors and Omissions) covers claims that a mistake in your work cost a client money. A large importer's agreement might read:

• Per claim and aggregate: the most paid for one claim, and for all claims in a policy year. See how limits are written.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done after the retroactive date (the earliest work date covered).
• No stacking language: the clause does not say primary plus excess is allowed. Confirm with the client that primary plus follow-form excess meets it.

Who asks freight brokers, customs brokers and travel firms for $3M?

Many firms here are asked for $1M or $2M (see $2M Professional Liability for logistics and travel firms). The step from $2M to $3M usually follows a larger client or a bigger contract. $3M usually comes from a client with a lot riding on your work:

• National shippers with high-value or time-critical freight
• Importers of regulated goods, or with large duty exposure, hiring a customs broker
• 3PL (third-party logistics) operators and retailers hiring a logistics consultant for a network or vendor project
• Corporate travel buyers choosing a travel management company

If the work is mainly software or systems consulting, the client may ask for Technology E&O (Professional Liability written for software and tech services) instead, so check which form the contract names.

How is $3M built?

A primary policy pays first. An excess policy pays only after the primary limit is used up. "$2M xs $1M" means a $2M layer above the first $1M. A $2M primary plus a $1M excess layer is one way to close the gap from $2M to $3M.

The excess should follow form, meaning it adopts the primary's terms. Every layer should share the same retroactive date and policy period. Many Professional Liability policies pay defense costs inside the limit, so check that each layer treats defense alike.

Already carry $1M or $2M? Request new quotes through Morrow for a new $3M primary or an excess layer, keeping your retroactive date and prior acts coverage (cover for earlier work) where the market allows.

Freight brokers often need contingent cargo (covers a shipper's lost or damaged freight) and contingent auto liability (covers the broker's liability for injury or damage caused by a carrier it hired), which can respond when a carrier's own insurance does not pay. A customs broker's E&O is separate from customs bonds, which guarantee duties and do not cover client claims.

A commercial umbrella (extra liability cover that sits above other policies) almost never covers Professional Liability, so do not count on it for the $3M.

What will underwriters ask for?

An underwriter decides if and how to offer coverage.

• An application listing each service, such as brokerage, customs filing, travel booking or consulting
• Revenue or gross bookings for last and next year, and your largest clients
• For freight brokers, how you vet and monitor carriers
• For customs brokers, how entries are classified and reviewed before filing
• For travel firms, how you handle deposits, supplier failures and trip changes
• The $3M contract, three to five years of loss runs (a report of past claims), and your current policy

What affects the cost?

• Your type of work. Customs entries and high-value freight may carry larger losses than leisure bookings.
• How the $3M is built. The primary layer often costs the most per $1M of limit. Excess is often lower, though this varies.
• Revenue and client mix. Large accounts can bring larger claims.
• Claims history. Past claims can shrink the limit offered and raise prices.
• Retention and defense terms. Retention is what you pay per claim before the policy pays, like a deductible. A higher one usually lowers premium.

Frequently asked questions

Can I get $3M Professional Liability (E&O) as a small freight broker or travel agency?

Sometimes, depending on revenue, services, claims history and available carriers. Small firms are rarely asked for $3M. When it is required, a $3M primary may not be offered to very small accounts, so a $1M or $2M primary plus excess may be needed where a carrier will write it.

Can my client be added as an additional insured on my $3M Professional Liability?

Usually not. Professional Liability protects you against claims from clients, so naming a client as an insured does not fit. Clients often ask instead for a certificate of insurance (a one-page proof of coverage) listing every layer. Confirm what your client accepts.

What if my client later asks for $5M Professional Liability?

$5M is very rare online and almost always requires a broker. Morrow can help you find it. See $5M Professional Liability for logistics and travel firms.

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.