The short version
- Contracts set the floor. Find the highest per claim and aggregate limits in your active contracts.
- Exposure sets the target. Size limits to the value of what your work influences, not to your fee.
- The aggregate matters if you have many clients. Several claims in one year share it.
- Defense terms change the math. If defense is inside the limits, part of your limit pays lawyers.
- An umbrella may not help. It extends professional liability only if its policy language lists it.
Per claim and aggregate limits
| Term | What it means |
|---|---|
| Per claim (sometimes written per occurrence) | The most the policy pays for one claim |
| Aggregate | The most it pays for all claims in the policy year |
| Deductible or retention | What you pay toward each claim before the insurer pays |
| Defense inside limits | Defense costs reduce the limit available for settlements and judgments |
| Defense outside limits | Defense is paid in addition to the limit |
A policy written $1,000,000 / $2,000,000 pays up to $1 million for any one claim and $2 million for all claims in the year.
What contracts and rules require
| Source | Requirement |
|---|---|
| Washington statewide IT project management contract (14822) | Technology E&O of $2,000,000 per occurrence and $4,000,000 aggregate when the agency requires it |
| One Washington DES design-build project (2023-166) | Design E&O of $2,000,000 per claim and $4,000,000 aggregate |
| Idaho Department of Education solicitation template | $1,000,000 per occurrence and $2,000,000 aggregate |
| Washington lawyers (RPC 1.4(c)) | Lawyers below $100,000 per occurrence and $300,000 aggregate must disclose that to clients in writing and get their written consent |
| Idaho lawyers representing private clients (Bar Commission Rule 302) | At least $100,000 per occurrence and $300,000 aggregate |
| Idaho real estate licensees (IDAPA 24.37.01.100) | At least $100,000 / $300,000 for individuals and $500,000 / $1,000,000 for firms, not counting defense costs |
Licensing minimums are floors, not recommendations; the client contracts we reviewed ask for $1 million or more per claim. Paste a contract into our contract insurance checker to see what it requires.
How to size your limit
- List contract requirements. The highest one is your minimum.
- Look at the stakes for your clients. A consultant whose advice drives a large system purchase faces a bigger potential claim than one whose work is a small piece of a project.
- Count your clients. Many clients and projects mean more chances of claims in the same year, which puts pressure on the aggregate.
- Check defense terms. If defense is inside the limits, consider a higher limit. Idaho Department of Education solicitation terms, for example, double the general liability limit when defense is inside the limits.
- Read your limitation of liability clauses. A contract that caps your liability to the client can reduce exposure, but some clients limit them; Idaho Department of Education terms, for example, bar caps on several kinds of damages, including the required insurance coverage.
- Pick a deductible you can pay without strain if a claim comes in.
When $1 million may not be enough
- Contracts that require $2 million per claim or more, such as the Washington technology and design-build contracts above
- Work tied to large financial decisions, system implementations, or construction projects
- Many clients, where several claims could hit the same aggregate
- Policies with defense inside the limits
- Law practice, for example: the ABA's study of legal malpractice claims from 2016 to 2019 found a substantial rise in the share of claims with payouts of $2 million or more
Using an umbrella for higher limits
An umbrella raises limits only over the policies it lists as underlying insurance. Washington's state contracting guidance names professional liability as one policy an umbrella can sit over, and says the umbrella's policy language must clearly list what types of insurance it covers. If your umbrella does not list professional liability, buy a higher E&O limit or excess E&O instead. See the umbrella and excess guide.