$5M Professional Liability (E&O) Insurance for Freight Brokers, Customs Brokers and Travel Firms

For freight brokers, customs brokers and travel firms: $5M Professional Liability (E&O) is a high limit that very large clients ask for, often built from a primary policy plus excess layers.

What does a $5M requirement mean for freight brokers, customs brokers and travel firms?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your mistake cost a client money. Examples are a wrong customs classification code or a booking error. 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 (how limits are written).
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work on or after the retroactive date (the earliest work date the policy covers).
• Primary plus excess: the last sentence allows stacked policies. If yours is silent, confirm with the client that primary plus follow-form excess meets it.
• After the work ends: many contracts require you to keep every layer in force for a set time, so check your clause.

Who asks freight brokers, customs brokers and travel firms for $5M?

See also $5M Professional Liability for freight forwarders.

• Large shippers moving high-value freight under broker-shipper agreements
• Large importers giving a customs broker high volumes of entries (import filings) or regulated goods
• Government agencies and prime contractors, where the limit is often set in the request for proposal (RFP)
• Large third-party logistics (3PL) companies that outsource freight booking to brokers
• Large corporate travel buyers whose contract makes the travel management company responsible for booking errors

How is $5M built?

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

Each excess layer should follow form, meaning it adopts the primary policy's terms. Every layer should share the same policy period and named insured (the business listed on the policy). Many Professional Liability policies pay defense costs (legal fees) inside the limit, which reduces what is left for claims. Check that each layer treats defense alike.

Compared with $3M, a $5M clause adds $2M of limit, so how the layers stack matters more.

Already carry a lower limit? Request new quotes through Morrow, either a new $5M primary or excess layers above your policy. Where the market allows, you can keep your retroactive date and prior acts coverage (cover for past work).

Freight brokers may need contingent cargo and contingent auto liability, backup coverages that may respond if the motor carrier's insurance does not pay. A customs bond promises the government that import taxes (duties) will be paid. It does not cover client claims. A commercial umbrella almost never covers Professional Liability.

What will underwriters ask for?

• An application listing each service, such as brokerage, forwarding or travel booking
• Revenue or gross bookings, past and expected, and your largest clients
• For freight brokers, carrier vetting steps, and your contingent cargo and auto coverage
• For customs brokers, entry review steps and licensed staff
• For travel firms, how client funds are held and supplier failures handled
• The contract asking for $5M, three to five years of loss runs (a report of past claims), and your current policy with its retroactive date

What affects the cost?

• Your type of work and accounts. Customs entries, high-value freight and large accounts often mean larger possible losses than leisure bookings.
• How the $5M is built. Excess layers usually cost less per $1M than the primary layer.
• Claims history. Past claims can raise the price or shrink what a carrier will offer.
• Retention and defense terms. Retention is what you pay per claim before the policy pays, like a deductible. A higher one usually lowers premium. Defense outside the limit often costs more.

Frequently asked questions

Do I need $5M Professional Liability as a freight broker, customs broker or travel firm?

Often only if your contract or client requires it. If it does, $5M may come from one policy or from a primary plus follow-form excess layers. $5M is very rare online and often needs a broker. Morrow can help you find it.

Does $5M in Professional Liability cover lost cargo?

Usually not. Physical loss of freight usually falls to the motor carrier's cargo policy, with contingent cargo as your backup.

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

Usually not, though some policies allow it in limited cases. Additional insured status is not automatic on Professional Liability, and where offered it covers only claims from your services and varies by carrier and layer. Some clients accept a certificate of insurance (a one-page proof of coverage) listing every layer. A certificate shows coverage exists but usually does not give the client rights under the policy.

What if my client asks for more than $5M in Professional Liability?

Higher limits usually add more excess layers. See $10M 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.