A client blames a consultant's advice for a bad quarter and sues, and the liability cap buried in the engagement letter turns out not to bind the people actually bringing the claim. Most professional services programmes are built from three or four policies rather than one, and the exposure that matters is rarely the one written into the contract.
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ContinueThe programme
A programme for a firm that sells advice is assembled from a few distinct policies. Each answers a different kind of claim, and the one that answers the claim you actually get is not always the one the client contract names.
Claims that your advice, work product or judgment caused a client a financial loss. This is the policy the engagement letter is talking about, and the one the rest of the programme is built around.
The risks that have nothing to do with what you recommended: a client who trips in your office, damage you cause to somebody else's property, an advertising injury claim.
Consultants, accountants and advisors routinely hold sensitive client financial data, and neither professional nor general liability answers a breach of it. The data arrives with the engagement whether or not anyone planned for it.
General liability and property bundled into one form, usually cheaper than buying the two separately. Worth pricing both ways rather than assuming the bundle is the smaller number.
Required once you have employees, and worth separating carefully from contractor arrangements, because where that line falls decides more than one policy on this list.
Discrimination, wrongful termination and non-compete disputes with former staff or contractors. None of the other policies on this programme reaches any of them.
Two of these are bought late and regretted early. A practice holding client financial records needs cover for a breach of client data because neither of the liability policies reaches a breach, and a smaller practice should price the bundled alternative for smaller practices before buying general liability and property as two separate forms.
Your practice
Different professional services firms carry different exposures, and what moves between them is not the size of the fee but the size of the loss a client can attribute to the work.
Professional liability is the foundation, because a solo practitioner carries the whole exposure personally.
Whatever the practice, the two questions an underwriter reaches first are what you actually advise on and who does the work. A firm that subcontracts delivery and a firm that employs it are different risks on the same revenue, and the difference is frequently not declared until a claim makes it obvious.
The programme answers claims about the work. What it struggles with is claims arriving from a direction the engagement letter never contemplated: from somebody who did not sign it, or about work somebody outside the firm performed.
Four claims against one firm, and which policy each one lands on:
Covered: A client alleges your advice caused them a financial loss. Professional liability, with defense.
Not covered: A client's business partner, who never signed your contract, sues over the same advice. Your liability cap does not bind them, and your limit has to be sized for that rather than for the contract.
Covered: A visitor is injured in your office. General liability, nothing to do with the advice.
Not covered: Work performed by a 1099 contractor, unless a contractor endorsement was arranged before that work began.
The pattern is worth naming, because it is the whole page. Firms think about liability through the lens of their own contract, and the contract is precisely what the most dangerous claims sit outside. Where a client specifies both a number and a form, what your contract asks the certificate to say matters as much as the limit itself.
The gaps
The gaps that catch professional services firms are rarely dramatic. They are quiet exclusions that only surface once a claim is already running. Eight that matter.
WHAT YOU NEED
A specific contractor endorsement, confirmed before subcontracted work begins rather than assumed afterwards.
WHAT YOU NEED
Limits sized for third-party exposure rather than for the liability cap in your engagement letter, because the cap does not bind a stranger to it.
WHAT YOU NEED
A separate specialty policy. Both general and professional liability typically exclude intellectual property disputes.
WHAT YOU NEED
Employment practices liability. Not general liability, and not professional liability either.
WHAT YOU NEED
Tail cover or a matched retroactive date, arranged before the gap opens rather than after it.
WHAT YOU NEED
Cyber liability. Neither of the other two policies reaches a breach, and this practice holds more sensitive data than most.
WHAT YOU NEED
Workers compensation, and the line between an employee and a contractor decides which policy is even in the conversation.
WHAT YOU NEED
Nothing. It is uninsurable everywhere, and worth stating because in an advice business the line between a bad recommendation and a knowing one is sometimes where the argument goes.
The first two are this page's subject and they share a cause: both are claims arriving from outside the engagement the firm was thinking about. The fifth is a timing question rather than a scope one, and a claims-made policy has rules that deserve more than a card, so they are set out in how a claims-made policy responds instead.
The engagement
Every firm that sells advice negotiates a scope of work and a liability cap, and then reasons about its exposure through that document. It is a reasonable instinct and it is wrong in three specific ways, each of which puts the claim outside the paperwork that was supposed to contain it.
A liability cap in an engagement letter is a contractual term between you and your client. It has no effect on somebody who never signed it. A client's business partner, an investor, a competitor or another third party can bring a claim about the same advice and arrive unburdened by the number you negotiated. That is why limits on this cover are sized to the loss a claim could represent rather than to the cap you agreed, and firms that size to the cap are the ones most surprised.
A scope of work says what you agreed to do. It does not say what the client will attribute to you when something goes wrong, and attribution is what starts claims. The gap between the engagement you scoped and the outcome the client blames is where most professional claims actually live, and no amount of careful scoping closes it entirely.
Your policy insures your firm and the people you employ. Work performed by 1099 contractors is frequently outside it unless a contractor endorsement was arranged before that work began. A firm that scales on contractor talent can double its delivery capacity and leave half of it uninsured without anyone making a decision to do so, because the growth happened in operations and the policy never heard about it.
All three are questions about the engagement rather than about the policy form. The mechanics of the form itself, claims-made and the retroactive date and the reporting period, are a separate subject with a page of their own, and both sets of questions have to be answered for the programme to actually hold. Where a client dictates the evidence as well as the limit, what your contract asks the certificate to say is the third piece.
Speak to our teamDelivery check
Each line below changes what a professional services programme has to carry. Nothing here is priced and nothing here is a quote.
What the programme has to answer
Tick how the work actually gets delivered and the cover it implies appears here.
Bring a recent engagement letter and your contractor agreements. Between them they answer most of this, and the two of them together are where the gaps on this page live.
Speak to our teamCost
Premium depends on factors specific to your practice rather than a flat industry rate, and the largest of them is not how much you charge but how much a client could lose.
An HR consultant and an IT security consultant carry very different financial exposure per claim, and the rate follows the size of the loss rather than the size of the fee.
Prior claims signal risk even when they resolved favourably, because the question underwriters ask is how often you are argued with rather than how often you were wrong.
Firms relying heavily on 1099 talent underwrite differently from firms with only W-2 employees, and declaring it accurately matters more than the headcount itself.
Higher limits and lower deductibles cost more, and they matter most when a client contract demands them regardless of what you would have chosen.
Some states and metro areas see higher claim frequency and tighter carrier appetite as a consequence of it.
Engagement letters, documented scopes and contractor agreements all reduce ambiguity, and ambiguity is what a defence costs money arguing about.
Three marks is an input that moves a professional services premium more than the others here. It is a relative weighting drawn from how carriers rate, not a rate and not a quote.
Most firms default to $1M per occurrence and $1M aggregate because that is the floor most client contracts specify. Firms landing larger contracts should expect those clients to specify higher limits well before the engagement starts, and the limit is worth sizing against what a client could lose rather than against what the last contract happened to ask for.
Talk to an expertProcess
We understand your business first, then take it to the carriers who want to write it. An advisor walks you through the options and what they cost. No two files are the same, so what follows is the shape of a placement rather than a script.
The subject of the advice, the value of a typical engagement, and how much of the delivery is done by people you do not employ. Those three answers decide the limit conversation and which markets will look at the file.
Appetite on professional liability varies sharply by the subject of the advice rather than by the size of the firm, so the file goes to underwriters who write your discipline. An advisor explains where the forms differ from one another.
A liability cap that the policy limit does not match, a scope that says less than the client believes, or contractor delivery nobody endorsed. We find those before you bind, and we handle how COIs get issued for the enterprise clients who specify the wording as well as the number.
Usually professional liability as the foundation, general liability for the non-advice risks, and cyber for the client data. Workers compensation and employment practices liability follow once there are staff.
Only against the person who signed it. A client's partner, investor or another third party is not bound by a cap in your engagement letter, which is why limits are sized to the potential loss rather than to the cap.
Frequently not. Your policy covers your firm and your employees, and work performed by contractors usually needs a specific endorsement arranged before that work begins.
Usually yes, because most client contracts require it and advertising injury exposure exists regardless of where the work actually happens.
No. That is cyber liability. Firms holding client financial records typically need both, and accountants and advisors hold more of that data than most.
Claims can arrive after you stop trading. Tail cover, arranged before the policy ends, is what answers them, and it cannot usually be bought afterwards.
Typically not by either general or professional liability. Intellectual property disputes tied to your work usually need a separate specialty policy.
$1M per occurrence and $1M aggregate is the common floor. Enterprise clients frequently specify more, and they specify the certificate wording as well as the number.
Get started
Whether you are an independent consultant or a growing firm running on contractor talent, we submit across markets that understand advice-based risk, and we read your engagement terms alongside the policy so the two agree with each other.
