$2M Professional Liability (E&O) Insurance for Relocation Companies

For relocation companies whose client contract asks for $2M: here is what the clause means and how to move up from a $1M policy.

What does a $2M requirement mean for relocation companies?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your services caused a client a financial loss. A 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.
• Check the split. A certificate showing "$2M" may mean $1M per claim. See limits explained.
• Claims-made: the policy covers claims made and reported while it is active, for work on or after the retroactive date (the earliest date of work it covers). That is why the clause asks for coverage after the contract ends. A tail (an extended reporting period) may give you more time to report claims after a policy ends.

Who asks relocation companies for $2M?

A $1M policy is a common starting point for service firms. A $2M request tends to appear when more money moves through your hands:

• Large employers with national mobility programs, often through a master services agreement (MSA).
• Relocation management companies (RMCs) that may require $2M from their suppliers.
• Home sale, buyout or guaranteed offer programs, where one error can involve a full home's value.
• Clients who give you expense payments or tax gross-up work (extra pay to cover taxes on relocation benefits).

Picture these hypothetical claims. A client says a firm set the wrong listing strategy in a buyout program and the employer lost money on the resale. Another says a payroll file sent wrong gross-up figures and it owed back taxes and penalties. These are illustrations, not real events. Guaranteed prices, taxes, fines and penalties are often excluded or limited, as are programs where the firm takes title or advances equity. Ask for written confirmation of how the policy wording treats these items before you rely on it. If a client asks for more than $2M, see $3M for relocation companies.

How is $2M built?

A $2M program may be one primary policy (the policy that pays first) written at $2M/$2M. Others use a $1M primary plus a $1M excess layer, a second policy stacked on top. The excess layer should follow form, meaning it adopts the primary policy's terms. Confirm with the client that primary plus follow-form excess meets the clause. Relocation firms may use Miscellaneous Professional Liability, a form for general service firms. If staff act as licensed real estate agents, you may also need real estate E&O.

Already carry $1M? Morrow can request $2M quotes, as a new primary policy or an excess layer, keeping your retroactive date and prior acts coverage (coverage for work done before the new policy starts) where the market allows. A commercial umbrella almost never covers Professional Liability.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. At $2M, an underwriter may ask for more detail than at $1M, such as:

• Your service mix and revenue from each, such as home sale, expense management and tax gross-up.
• Whether you take title to a home, advance equity or guarantee a sale price.
• How you handle client funds and check gross-up figures.
• Your largest clients and the contract that asks for $2M.
• How you vet suppliers such as movers.
• Loss runs (a carrier report of past claims), known incidents and your current policy.

What affects the cost?

• Service mix and volume. Home sale and tax work usually cost more to insure than destination services. More moves mean more chances for a claim.
• Claims history. Prior claims can raise the price.
• How the limit is built. A $2M primary and a $1M primary plus excess can price differently. A higher retention (the amount you pay per claim, like a deductible) usually lowers premium.
• Defense terms. Many policies pay defense costs inside the limit. Defense outside the limit costs more.

Frequently asked questions

Do I need $2M Professional Liability (E&O) as a relocation company?

Yes, if your client contract requires it. Without it, you may not be able to sign.

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

Usually not if the clause says $2M per claim, because a $1M/$2M policy pays $1M per claim. Request $2M/$2M quotes, or a primary plus follow-form excess layer, through Morrow.

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

Usually not. Additional insured status (the policy also protects the client) is less common on Professional Liability than on general liability, and it is not automatic. Some carriers may allow it when a written contract requires it, subject to underwriting. A certificate of insurance only shows your coverage. It does not extend it to the client.

Does Professional Liability cover damaged household goods or a data breach?

Usually not. Professional Liability generally does not cover physical loss to goods. That falls to the mover's cargo liability or valuation coverage. A breach of transferee data is usually a Cyber claim (Cyber Liability insurance covers data breaches and related costs).

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.