$2M Professional Liability (E&O) Insurance for Mediators and Arbitrators

For mediators and arbitrators, a $2M requirement usually means $2M per claim and $2M aggregate in Professional Liability, so a $1M/$2M policy may not meet it.

What does a $2M requirement mean for mediators and arbitrators?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your work as a neutral (the mediator or arbitrator who handles a dispute) caused someone a financial loss. A panel or program clause might read:

• Per claim: the most the policy pays for any one claim. Here, $2M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, also $2M.
• Claims-made: the policy covers claims made and reported while it is active, for work on or after the retroactive date.

Who asks mediators and arbitrators for $2M?

Some neutrals who get a written requirement are asked for $1M (see $1M Professional Liability for mediators and arbitrators). $2M often shows up when more money is at stake. You may see it from:

• Alternative dispute resolution (ADR, meaning mediation and arbitration) firms and panels that assign you complex commercial, construction or insurance cases.
• Government agencies hiring neutrals on larger contracts.
• Corporate legal departments running employment or vendor dispute programs.
• Occasionally, a party or counsel in a very large multi-party matter, through the engagement terms.
• A few court-connected panels for complex business cases. Most do not require E&O at all or ask for far less.

How is $2M built?

The simplest way is one primary policy (the policy that pays first) at $2M/$2M. Another way is a $1M primary plus a $1M excess layer, which pays after the primary limit is used up. The excess should follow form, meaning it uses the same terms as the primary. Confirm with the client that primary plus follow-form excess meets the clause. A commercial umbrella almost never covers Professional Liability, so it usually cannot fill the gap (see Does a commercial umbrella cover Professional Liability?).

Neutrals who are not attorneys usually buy Miscellaneous Professional Liability, a form made for service businesses. Confirm the form covers mediation and arbitration and has no exclusion for adjudicative acts. Attorneys usually carry lawyers professional liability instead, and some Miscellaneous forms exclude legal services. If you are an attorney who mediates, confirm your policy expressly covers ADR work at $2M. If you store case files or host video sessions, ask about Cyber too (coverage for data breaches and hacking) (see Professional Liability vs Cyber).

What will underwriters ask for?

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

• Your largest amounts in dispute, and how often you handle high-value or multi-party cases.
• Case types, such as construction, commercial, employment or family, and the revenue share of each.
• Whether you draft settlement agreements, term sheets or written awards, and who reviews them.
• Your conflict check steps, and whether any award has been challenged.
• The panel or program agreement, including any indemnity terms (promises to cover the other side's losses).
• Revenue, team size, record storage, prior claims and your retroactive date.

What affects the cost?

• Case size and mix. Large commercial and construction disputes usually carry more exposure than community work.
• Drafting and award writing. Writing settlement terms or reasoned awards adds exposure over facilitation only.
• Volume and team size. More cases and neutrals mean more chances for a claim.
• Claims history. Prior claims can narrow options.
• Structure and terms. $2M/$2M usually costs more than $1M/$2M. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) usually lowers the premium.

Frequently asked questions

Do I need $2M Professional Liability as a mediator or arbitrator?

Only if your panel, agency or client agreement requires it, so check the insurance section of the agreement.

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

Usually not, because a $1M/$2M policy pays at most $1M on one claim. Your certificate may show $2M only as the aggregate, so check the declarations page (the summary at the front of the policy) for both numbers.

I carry $1M Professional Liability as an arbitrator and a panel now wants $2M. What should I do?

Request new quotes for a $2M policy, or a $1M primary plus a $1M excess layer, through Morrow. Morrow can ask carriers to keep your retroactive date and prior acts coverage (coverage for work done before the new policy starts) where the market allows. Report anything that could become a claim to your current carrier before that policy ends.

Can a panel be added as an additional insured on my mediator Professional Liability policy?

Usually not on Professional Liability. Some panels accept a certificate of insurance that shows the limits and policy dates. Check your agreement.

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.