$3M Professional Liability (E&O) Insurance for Relocation Companies

For relocation companies whose client contract asks for $3M: Professional Liability (E&O) is often met with one $3M primary policy or a smaller primary plus a follow-form excess layer.

What does a $3M 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 $3M clause might read like this:

• Per claim and aggregate: the most paid for one claim, and for all claims in a policy year.
• Claims-made: Professional Liability almost always covers claims made and reported during the policy. The retroactive date is the earliest date of work it covers.
• Covered services: the policy should name every service in the clause. Some policies limit or exclude services such as tax or immigration work.
• Primary plus excess: a primary policy with a follow-form excess layer can reach $3M. Confirm with the client that this meets the clause.

Who asks relocation companies for $3M?

Many relocation contracts ask for $1M or $2M. Going to $3M usually means a higher primary limit or an added excess layer. It is less common and may come up with large employers or when the dollars per move are large:

• Home sale and buyout programs, where your firm handles appraisals, offers or equity advances on a transferee's home.
• Relocation management companies (RMCs) that pass their own $3M requirement down to supplier firms.
• Government agencies and contractors, often through a master services agreement (MSA).
• International assignment programs with tax or immigration work.

Picture three hypothetical claims. A buyout price is set from a stale market report. A tax gross-up (extra pay to cover taxes on relocation benefits) is coded wrong for a year of transferees. A missed visa deadline delays an executive's start date. None of these are real events.

Standard policies often limit or exclude valuation and resale losses, tax and payroll work, immigration services and handling of funds. Check the wording for each one.

How is $3M built?

A primary policy pays first. An excess policy pays only after the primary limit is used up. "$1M xs $2M" means a $1M layer above the first $2M.

Relocation firms are often written on Miscellaneous Professional Liability, a general form for service firms. If your staff act as licensed real estate agents or brokers, real estate E&O may be needed instead or alongside (see $3M for real estate services). Every layer should share the same retroactive date, policy period and named insured (the business the policy covers). Many policies pay defense costs inside the limit, so check that each layer treats defense the same way.

What will underwriters ask for?

• Revenue by service, such as move management, home sale or buyout, tax gross-up and immigration.
• Whether you take title to homes, advance home equity before a sale closes, or hold client or transferee funds, and your payment controls.
• Moves per year, international share and largest clients, and how buyout offers are set.
• The $3M contract, your standard client agreement and your supplier contracts.
• Three to five years of loss runs (a report of past claims), any incidents, and your retroactive date.

What affects the cost?

• Service mix. Home sale, buyout and tax work may cost more to insure than destination services.
• Volume and client size. More moves mean more chances for claims.
• How the $3M is built. The primary layer usually costs the most per $1M of limit.
• Claims history. Past claims can raise the price or shrink the limit offered.
• Retention and defense terms. Retention works like a deductible. A higher one usually lowers premium. Defense outside the limit usually costs more.

Frequently asked questions

Can my commercial umbrella get my relocation company to $3M in Professional Liability?

Almost never. A commercial umbrella usually excludes professional services. You usually need a higher primary limit or a follow-form excess Professional Liability policy. See umbrellas and Professional Liability.

I have $1M Professional Liability as a relocation company. How do I reach $3M?

Ask Morrow to request new quotes, either a new $3M primary or an excess layer above a primary policy. 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 known incidents to your current carrier before switching.

Can a client employer be added as an additional insured on my $3M Professional Liability?

Often not, and it varies by carrier. Some carriers allow it in a limited form, usually only for the client's liability for your services and where a written contract requires it. Many clients accept a certificate of insurance (a one-page proof of your coverage) instead. It can list every layer.

Does Professional Liability cover a transferee's damaged furniture?

Usually not. The moving company's cargo or valuation liability usually handles damage to goods, or contingent cargo coverage if you subcontract the move. General liability may respond in some situations. Professional Liability is for financial loss from your services.

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.