$2M Professional Liability (E&O) Insurance for Public Adjusters

For public adjusters whose client or partner contract asks for $2M, the contract usually calls for a policy that pays $2M on one claim, often a $2M/$2M primary or a primary plus follow-form excess.

What does a $2M requirement mean for public adjusters?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your professional work caused someone a financial loss. For a public adjuster, that usually means a policyholder says your handling of their claim cost them money. A typical clause looks like this:

• 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: almost all Professional Liability is claims-made. It covers claims first made and reported while the policy is active, for work done after the retroactive date (the earliest work date covered). See Professional Liability limits explained.

Who asks public adjusters for $2M?

$2M is a step up from $1M. It shows up when one mistake could cost the owner well over $1M. If your contract asks for less, see $1M for public adjusters. You may see $2M from:

• Owners of large commercial or industrial buildings.
• Real estate investors and property managers with many buildings.
• Large condo associations facing a building-wide fire, wind or water loss.
• Some institutional owners with large campuses may ask after a major loss, but this is less common.
• Larger firms with partners on big catastrophe files.

Larger losses may call for more (see $3M for public adjusters). $3M is rarely found online. Morrow can help you find it.

How is $2M built?

At $2M, the limit is often one primary policy (the policy that pays first) written at $2M/$2M. Sometimes a $1M primary is paired with a $1M excess layer (an extra policy above it). The excess should follow form (use the primary's terms). Confirm with the client that primary plus follow-form excess meets the clause. A commercial umbrella (a policy that adds limit above your general liability and auto) almost never covers Professional Liability (see Does a commercial umbrella cover Professional Liability?).

Public adjusters may buy a Miscellaneous Professional Liability form (a general form for service firms) or a policy written for public adjusting. Check that the policy names public adjusting as a covered service. Clients usually cannot be added as an additional insured (listed on your policy for protection). Many ask for a certificate of insurance (a one-page proof of coverage) instead.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. At $2M, they often ask about:

• Your residential and commercial mix and largest recent claims.
• Catastrophe work: where you deploy and how you check licenses.
• Whether you act as a party-appointed appraiser for your client, or ever as an umpire (the neutral who decides when the two appraisers disagree, a role some states may not allow), and how you track suit deadlines.
• Your fee agreement and whether you hold settlement funds.
• Revenue, staff, prior claims, complaints, and your retroactive date.

What affects the cost?

• Claim size and type. Large commercial and catastrophe files usually cost more than routine residential ones.
• Revenue and file volume. More and bigger files mean more chances for error.
• Controls. Deadline tracking and second review can help.
• Claims history. Prior claims can raise the price or narrow options.
• How the limit is built and its terms. A $2M/$2M primary and a primary plus excess can price differently. A higher retention (the amount you pay on each claim before the policy pays) usually lowers the premium.

Frequently asked questions

I carry $1M Professional Liability as a public adjuster. How do I get to $2M?

Ask Morrow to request new quotes, either for a new $2M/$2M primary or for a $1M excess layer above a $1M primary. Quotes can be requested with your retroactive date and prior acts coverage (coverage for past work) kept in place, where the market allows. It is usually wise to keep your current policy until any new coverage starts, so there is no gap. Before switching, report anything that could become a claim to your current insurer.

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

Usually not. A $1M/$2M policy pays up to $1M on any one claim, which is below a $2M each claim clause. A $2M/$2M primary, or a $1M primary plus a $1M follow-form excess layer, may meet it. Send Morrow your contract and current policy to review.

Do I need Professional Liability for three years after a public adjusting claim settles?

If your contract says so, coverage usually has to stay in place for that period. Meeting a clause like this usually means renewing each year without a gap and keeping the same retroactive date, though what is possible depends on your policy and underwriting. If you close your firm, an extended reporting period (a "tail," extra time to report claims) may be available, depending on the policy. Morrow can review your contract and policy.

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.