Limits of Liability – are they adequate on my policy?
It is difficult to know how much insurance your firm will need when it comes to a claim. There are some ways to determine what may make sense for your firm.
Probably the most obvious way to determine limits of liability in your professional liability policy is by contract requirements. However, these are always cut and dry either. Some contracts will ask for $10 million in limits and your firm may only have billings on the project of $5,000. This limit would not make sense for this project and a negotiation on the limits of liability will be needed. However, if your firm is the prime on the project and the construction value is $50 million, then the $10 million limit would make more sense.
Another way to determine limits of liability is to find out what other firms of similar size and projects have for limits of liability. Again, this may not always be easy to determine but your firm’s agent may be able to help with what the averages of limits of liability are for similar firms.
As your firm grows it is a good idea to review the limits of liability on your professional liability policy. If your firm started out with limits of liability of $500,000 per claim and $1,000,000 aggregate and your firm now has $1 million in billings, it may be time to increase your limits of liability.
It’s always a good idea to get options of limits of liability at renewal time. This way your firm can determine if the premium is within your budget if you choose to increase your limits of liability.
If you have any questions with regard to choosing limits of liability please call, or email, your Professional Underwriters agent for assistance.