$5M Professional Liability (E&O) Insurance for Records Management Companies

For records management companies, a $5M Professional Liability (E&O) requirement usually comes from a court, large law firm or legal department, and may be met by one policy or a primary plus follow-form excess.

What does a $5M requirement mean for records management companies?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work cost a client money. A $5M clause might read like this:

A legal hold is an order to keep certain records, even past their normal destruction date, because of a lawsuit. Key terms:

• Per claim and aggregate: the most paid for one claim, and for all claims in a policy year.
• Claims-made: the policy covers claims made and reported while it is active, for work after the retroactive date (earliest covered work date).
• Five years after: you would usually renew every layer, with the same retroactive date, for that long, or buy an extended reporting period (tail) if you stop renewing, which usually does not restore the limit.

Who asks records management companies for $5M?

Records companies are often asked for $1M, $2M or $3M. A $5M ask can show up when you run a client's whole records program, not just store its boxes, because a missed legal hold or a bad index can affect an entire case file set:

• Courts and government agencies digitizing case files.
• Large law firms moving all matter files to you under one master service agreement (MSA).
• Health systems using you for chart storage.

If you host data or support e-discovery, the client may also want Technology E&O and Cyber insurance (which covers data breach costs). Law firms that give legal advice usually buy lawyers professional liability instead.

How is $5M built?

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

Each excess layer should follow form, meaning it uses the primary policy's terms. Every layer should share the same retroactive date, policy period and named insured (the business listed on the policy). A commercial umbrella almost never covers Professional Liability. If your clause is silent on excess, confirm with the client that primary plus follow-form excess meets it. A $5M limit almost always needs a broker. Morrow can help you find it.

What will underwriters ask for?

• Revenue by service: storage, scanning, legal hold work, destruction and hosting.
• Your largest contracts and your share of court, law firm, health and government work.
• How legal holds reach your floor and who can override a destruction date.
• Indexing checks, chain of custody and subcontractors.
• The contract, loss runs (a report of past claims), and your current policy.

What affects the cost of $5M?

• Program scope. Managing legal holds usually costs more to insure than storing boxes.
• Client mix. Court, litigation and medical files carry larger possible losses.
• How the tower is built. The primary layer often costs the most per $1M.
• Claims history. Prior claims can raise prices on every layer.
• Retention. This works like a deductible.

Frequently asked questions

Do I need $5M Professional Liability as a records management company?

Only if your contract or client requires it. A hypothetical claim could be a court agency saying scanned case files were indexed wrong, or a client saying you destroyed records under a legal hold. A data breach may also need Cyber. Physical loss of or damage to records in your care is often excluded from Professional Liability or limited, and may need separate records storage legal liability coverage.

I already have $2M Professional Liability. How do I get to $5M?

Request new quotes through Morrow, either a new $5M primary policy or excess layers. Morrow can ask carriers to keep your retroactive date and prior acts coverage (coverage for earlier work) where the market allows. Report anything that could become a claim to your current carrier before switching.

Can my client be added as an additional insured on my $5M Professional Liability?

Usually not. It is not standard on Professional Liability forms. Some carriers may add a client, with narrower protection than general liability. If your contract requires it, tell Morrow early so quotes can check that every layer follows it. Many clients accept a certificate of insurance instead.

How long does it take to put $5M in place?

Timing varies. Each layer may need its own underwriting review, so a tower can take longer than a single policy. Send the contract and your current policy early so quotes can start before your deadline.

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.