$1M Professional Liability (E&O) Insurance for Senior Placement Agencies

If a senior living community asks your placement agency for $1M in Professional Liability, you usually need a $1M per claim limit and should check whether it also wants a $2M yearly total.

What does a $1M requirement mean for senior placement agencies?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your advice or services caused someone a financial loss. For a placement agency, that advice is which community, care level or option fits a senior. A typical clause in a referral agreement looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. A $1M/$1M policy does not meet this clause. A $1M/$2M policy would meet either wording. Check the full clause.
• Claims-made: Professional Liability almost always covers claims made and reported while the policy is active, for work done on or after the retroactive date (the earliest date of work the policy covers).
• Certificate: partners usually accept a certificate of insurance, a one-page summary of your coverage. Partners usually cannot be added as an additional insured (named on your policy for coverage) on Professional Liability. Many accept a certificate instead, but check your agreement.

Who asks senior placement agencies for $1M?

Senior placement agencies may be asked for $1M. It can come up with:

• Assisted living, memory care and independent living communities that pay referral fees.
• Regional senior living operators and management companies with a vendor process.
• Large operators, which may ask for $2M or $3M.

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first), with nothing stacked above it. If a larger operator asks for more, the next step is usually a higher primary limit, or a primary policy plus an excess layer that follows form (matches the primary policy's terms). See $2M for senior placement agencies. Placement agencies usually buy a Miscellaneous Professional Liability form, made for service businesses without their own policy type. Many buy it in a package with General Liability, which covers injuries and property damage at your office or on a tour. If your agency also provides hands-on care, that may need other coverage, such as home care. See Professional Liability vs. General Liability.

Some Professional Liability policies exclude bodily injury. General Liability often excludes professional services. A claim that your referral led to a senior's fall could fall between the two. A commercial umbrella almost never covers Professional Liability, so it usually cannot fill that gap (see Does a commercial umbrella cover Professional Liability?). Morrow can review the agreement and policy wording and help you find the coverage.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. For a placement agency, they usually ask about:

• Your services: in-person tours, care assessments, phone or online referrals only, or help with moves.
• How you are paid: community referral fees, family fees or both, and how you disclose them.
• How you check communities, such as license status and inspection reports, before you refer.
• Who does assessments, and whether any staff are nurses or social workers.
• Whether you ever provide care, transport seniors or handle their money.
• Placements per year, revenue, written agreements, prior claims and your current retroactive date.

What affects the cost?

• Depth of involvement. Hands-on assessments and move help usually add exposure over list-only referrals.
• Volume and revenue. More placements mean more chances for a claim.
• Who you serve. Memory care and high-needs placements may draw more questions.
• Claims history. Prior claims can raise the price or narrow options.
• Aggregate, retention and defense terms. $1M/$2M usually costs more than $1M/$1M. A higher retention (the amount you pay on each claim, like a deductible) usually lowers the premium. Defense outside the limit often adds cost.

Frequently asked questions

Do I need $1M Professional Liability as a senior placement agency if I do not provide care?

Often yes, if your agreement asks for it, because your advice shapes where a senior lives and what care they get. If a family says that advice was wrong, they may sue your agency and the community. The community wants to know you carry your own coverage for your part.

Is $1M/$1M enough if my agreement says $1M/$2M?

No, a $1M/$1M policy does not meet a $1M/$2M clause. Request new quotes for a $1M/$2M policy. Morrow can request those quotes and ask carriers to keep your current retroactive date and prior acts coverage (cover for past work) where the market allows. In many cases it makes sense to keep your current policy in force until a new one starts. Report anything that could become a claim to your current carrier before that policy ends.

What happens to my Professional Liability if I close my senior placement agency?

A claim first made after the policy ends is generally not covered. A tail, or extended reporting period, gives you extra time to report claims about past placements. It usually must be bought soon after the policy ends. See tail coverage.

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.