$1M Professional Liability (E&O) Insurance for Inspection, Safety and Technical Consultants

For inspectors, safety consultants, testing labs and investigators: $1M Professional Liability (E&O) pays covered claims that a mistake in your work caused a client a loss, up to $1M per claim.

What does a $1M requirement mean for inspection and safety consultants?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a loss. A typical clause 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 would not meet this 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).
• "Covering the services": the policy should describe the work you actually do. Work left off the application may go uncovered.

For more, see Professional Liability limits explained.

Who asks inspection and safety consultants for $1M?

You may see $1M from:

• Manufacturers hiring inspectors or testing labs.
• Insurers hiring loss control consultants and, through special investigation units, private investigators.
• Law firms hiring forensic consultants.
• Construction and energy companies hiring safety consultants.
• Government agencies buying inspection or testing.
• Businesses seeking quality or safety management certification, which sometimes hire compliance consultants.

Large projects, energy and government work may ask for $2M, usually with a $2M aggregate (see $2M Professional Liability for inspection and safety consultants).

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first), with no excess layers (extra policies above it). A commercial umbrella (an extra liability policy above your other policies) almost never covers Professional Liability (see Does a commercial umbrella cover Professional Liability?). Clients usually cannot be added as an additional insured (someone else covered under your policy). If your contract asks for either, send it to Morrow before you buy.

Many firms here buy Miscellaneous Professional Liability, a form for service businesses without their own policy type. Licensed engineers who stamp work usually need architects and engineers (A&E) Professional Liability instead.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. At $1M, expect questions on:

• Each service you offer, with a rough share of revenue.
• Revenue, largest clients, typical job size and industries served.
• Whether you certify or sign off on work, and who holds licenses.
• Quality steps, such as peer review and lab accreditation, and your use of subcontractors.
• Prior claims, anything that could become a claim, and your current retroactive date.

What affects the cost?

• Type of work. Safety, energy and forensic work may be rated higher than certification paperwork or training, because a miss can cause bigger losses.
• Sign-off authority. Certifying that something is safe may raise the risk the underwriter sees.
• Revenue, job size and claims history. Bigger jobs and 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 before the policy pays, similar to a deductible) usually lowers the premium (the price of the policy). Defense outside the limit often adds cost.

Frequently asked questions

Does a subcontractor inspector need its own Professional Liability?

Often yes. Many clients ask each inspector or lab to carry its own policy, even when working under a larger firm. Check whether the contract names subcontractors, and send the insurance section to Morrow so it can be reviewed.

I have a $1M/$1M policy and the contract asks for $1M/$2M. What now?

Morrow can request quotes for a new $1M/$2M policy and ask to keep your retroactive date and prior acts coverage (coverage for past work done before the new policy starts) where the market allows. Keep your current policy in force until the new one starts. Report anything that could become a claim to your current carrier before that policy ends.

Is $1M enough if my client may ask for $2M later?

Not always. Energy, government and large project clients may ask for more, so read each new contract.

Does General Liability cover a hazard I missed in an inspection?

Often not. Many General Liability policies exclude professional services. Injury or property damage coverage varies by Professional Liability form. Reading both policies together can show a gap.

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.