$2M Professional Liability (E&O) Insurance for Title Abstractors

Title abstractor whose client asks for $2M? A $2M Professional Liability (E&O) limit is the most a policy may pay for covered claims. Your contract decides what limit you need.

What does a $2M requirement mean for title abstractors?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your work caused a client a financial loss. A title abstractor researches property records and sums up a property's ownership history. A typical clause reads:

• 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.
• Matching the numbers: a $1M/$2M policy has only $1M per claim, so it may fall short of this clause.
• Claims-made: the policy pays for claims first made and reported while it is active, for work done on or after the retroactive date (the earliest work date the policy covers). That is why clauses ask you to keep coverage after the work ends.

For more, see Professional Liability (E&O) limits explained.

Who asks title abstractors for $2M?

Small abstractors often see $1M first (see $1M Professional Liability for title abstractors). Requests for $2M may come from:

• Title insurance companies that use your searches to issue policies.
• Large title agencies and law firms with high-value orders.
• Lenders, loan servicers and national vendor management companies with one standard for every searcher.
• Commercial deals with large loans or many parcels.

Here is a hypothetical. A search misses an unpaid lien (a legal claim on a property for a debt) on a commercial building. Later, the lender finds the lien and blames the search. On a large deal, defense bills and a settlement can pass $1M.

How is $2M built?

A $2M limit may be one primary policy (the policy that pays first), or $1M primary plus a $1M excess layer (an extra policy stacked on top). Excess layers should follow form, which means they use the same terms as the primary. If you stack layers, confirm with the client that they meet the clause. For $3M or more, you usually need a primary plus excess layers and often a broker. Morrow can help you find it.

A commercial umbrella almost never covers Professional Liability. Clients usually cannot be added as an additional insured (a party listed on your policy so it gets coverage too). If your contract asks for that, send it to us. A certificate of insurance (a one-page summary of your coverage) is usually what clients can receive.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. For title abstractors, they usually ask about:

• Your services, such as full searches, abstracts or lien searches, and whether the work is residential or commercial.
• Your yearly order count, revenue and quality checks, such as a second review before you send a report.
• Whether you issue title insurance, handle closings or hold client funds.
• Prior claims, known errors and your retroactive date.
• Whether the policy form names title searches and abstracts as covered professional services. Real estate E&O is built for agents and brokers, so it is a different product.

What affects the cost?

• Order volume and deal type. More searches, and commercial work, mean more chances for a costly miss.
• Claims history and review process. Prior claims and weak checks can raise cost.
• Limit and structure. A higher limit usually costs more. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) may lower the premium.
• Defense and prior acts terms. Defense outside the limit, or full prior acts coverage (no retroactive date), can add cost.

Frequently asked questions

What if my contract says $2M but does not say per claim or aggregate?

Ask the client to confirm in writing which one it means. Many contracts mean $2M per claim. Send the clause to Morrow and we can review it with your policy.

Does my general liability policy count toward a $2M Professional Liability requirement?

Usually not. General liability policies often exclude claims from professional services, such as title searches. A Professional Liability policy is usually what the clause means.

I carry $1M today. How do I get $2M Professional Liability as a title abstractor?

Request new quotes for a $2M policy through Morrow, as a new primary or a primary plus excess. Morrow can request quotes that keep your retroactive date and prior acts coverage where the market allows. Keeping the current policy until a new one starts may help avoid a gap. Report anything that could become a claim to your current carrier before it ends.

Does Professional Liability cover me if I handle closings or hold client funds?

Often only in part. Many Professional Liability policies limit or exclude handling money. Underwriters usually ask about it. Other coverage may be needed for escrow or funds.

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.