$10M Professional Liability (E&O) Insurance for SaaS Companies

If a very large customer's contract requires $10M, your SaaS company usually needs $10M of Professional Liability (E&O) per claim and in total, often built as a primary policy plus excess layers.

What does a $10M requirement mean for SaaS companies?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a failure in your service cost a customer money. Many SaaS companies buy Technology E&O, a form written for software firms, often paired with Cyber (cover for data breaches and network attacks). A $10M clause in a customer's MSA (master service agreement) may read like this:

• Per claim and aggregate: $10M for one claim and $10M for all claims in the policy year.
• "Umbrella or excess": a commercial umbrella almost never covers Professional Liability.
• Three years after: Professional Liability is almost always claims-made, meaning it covers claims first made while the policy is active. You would usually need to renew every layer for those three years.

Who asks SaaS companies for $10M?

Smaller SaaS contracts often ask for $1M, $2M or $3M. Larger enterprise deals may reach $5M. A $10M request is rarer. Compared with $5M, it usually means more layers, each another policy to renew. Customers ask when a platform failure could cost them a lot:

• Global enterprises that send one MSA to every vendor.
• Banks, payment firms and insurers that run payments through your app.
• Large health systems where your product stores or moves patient data.
• Major retailers and logistics firms that run orders on your platform.

How is $10M built?

Many buyers build $10M as a tower: a primary policy with excess layers stacked above it. A single $10M primary policy is possible but uncommon. A primary policy pays first. An excess layer is a separate policy that pays only after the limits below it are used up. "$5M xs $5M" means a $5M layer sitting above the first $5M.

Each excess layer should follow form. That means it uses the primary policy's terms. If a higher layer adds its own exclusion, a claim could be covered low in the tower but not higher up. If your primary combines Technology E&O and Cyber, check each excess layer. See Professional Liability vs. Cyber.

Many policies pay defense costs inside the limit, so legal bills shrink what is left for settlements. Confirm this for each layer.

What will underwriters ask for?

Each insurance company's underwriter (the person who decides whether to offer coverage and at what terms) may ask about:

• What your platform does, your recurring revenue and how much comes from implementation work.
• Your uptime promises and any customer with a large share of revenue.
• How you release code, separate customer data and secure hosting and logins.
• The MSA asking for $10M, including any limitation of liability clause (a cap on what you owe a customer).
• Five years of loss runs (a report of past claims).

What affects the cost?

• What your platform runs. Software that moves money, holds health data or runs core operations often costs more.
• Revenue and customer mix. More revenue or one very large customer usually means more exposure.
• Contract promises. Strict uptime targets can raise cost.
• How the tower is built. Each extra layer is another policy to price.
• Claims, controls and retention. Past claims or weak security can raise the price. Retention is the amount you pay before the policy responds.

Frequently asked questions

Could a claim against my SaaS company really reach $10M?

Yes, a claim could reach $10M if a platform failure costs a very large customer major losses. Two hypothetical examples: a bad release corrupts a bank's records, or an outage hits a retailer's busiest week and it claims lost sales.

Can I go from $3M to $10M in Professional Liability as a SaaS company?

It may be possible, depending on your revenue and risk profile. Excess insurers often require a minimum primary limit, so a $3M primary may or may not fit the tower you need. Morrow can request new quotes for a higher primary policy or excess layers, keeping your retroactive date (the earliest date of work covered) and prior acts coverage (cover for past work) where the market allows. Report known incidents to your current insurer before you switch.

Can my SaaS customer be added as an additional insured on my Professional Liability?

Sometimes, but not on the standard policy. The base form usually does not name customers as insureds (people covered by the policy). Some Technology E&O insurers add a customer as an additional insured by a written policy change when your contract requires it. It is often limited to liability arising from your services and is narrower than additional insured status on a general liability policy. Each excess layer must also provide it, and availability varies by insurer. A certificate of insurance (a summary of your coverage) usually gives its holder no rights under the policy. Whether a certificate listing every layer satisfies your customer depends on your contract.

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.