How to Negotiate to Remove or Limit Exclusions in Professional Liability Insurance (Errors & Omissions)

Professional Liability (Errors & Omissions, or E&O) exclusions can cripple coverage when you most need it. In the USA, businesses from New York City to San Francisco and Minneapolis face policy exclusions that are broadly worded and expensive to challenge. This article gives a practical, lawyer-tested approach to negotiating removals or limitations of exclusions, with concrete tactics, pricing context, and sample language you can take to brokers and carriers.

Why exclusions matter — and what’s typical

Exclusions commonly found in E&O policies include:

• Intentional acts, fraud, and criminal conduct
• Bodily injury and property damage
• Contractual liability or indemnities you’ve assumed
• Punitive damages
• Prior-acts and retroactive date exclusions
• Project-specific or client-specific carve-outs

These exclusions are standard because carriers limit unpredictable exposures. However, many exclusions can be narrowed, carved back, or negotiated into endorsements when you demonstrate low risk or accept limited additional premium.

For baseline pricing context in the US market:

• Small professional firms (consultants, designers) typically pay $500–$2,000/year for a $1M/$1M policy. (Source: Insureon)
• Larger or higher-risk professions (architects, certain technology firms) often pay $2,000–$10,000+ depending on limits and exposures. (Sources: Hiscox, The Hartford)

Sources:

• Insureon — professional liability cost guidance: https://www.insureon.com/professional-liability-insurance/cost
• Hiscox small-business E&O: https://www.hiscox.com/small-business-insurance/professional-liability-insurance
• The Hartford overview: https://www.thehartford.com/business-insurance/professional-liability-insurance

Prepare before you negotiate

A successful negotiation is built on documentation and leverage. Do this first:

1. Assemble your risk profile

   • Prior claims history (loss runs for 5–7 years).
   • Client contract samples (show common indemnity clauses).
   • Standard operating procedures and quality controls (training logs, peer review processes).
   • Revenue mix by client and project type.

2. Identify the precise exclusion language

   • Highlight the clause and call out ambiguous phrases like “any claim arising out of…” or “resulting from.”
   • Compare with industry-standard forms (e.g., ACE/ISO or carrier-specific forms).

3. Get competing quotes

   • Use a broker to obtain at least 2–3 alternatives — major carriers like Hiscox, The Hartford, CNA, and Chubb serve different niches and appetite. Competition creates leverage.

4. Define what you want

   • Full deletion vs. carve-back for specific conduct, clients, or projects.
   • Sublimits or increased retentions instead of deletion.
   • Endorsements that add coverage for a narrow exposure (e.g., cyber-breach-related professional services).

Negotiation strategies that work

1) Trade premium or retention for coverage

Offer a higher deductible or accept a sublimit in exchange for deleting or narrowing an exclusion. Example: ask to replace an exclusion with a $250,000 sublimit for that exposure and a $50,000 premium loading.

2) Narrow the exclusion by activity, client or time

Instead of a blanket deletion, request a carve-back:

• “Coverage for claims arising from advisory services to client X on Project Y is reinstated.”
• Or narrow to events after a given retroactive date.

3) Add affirmative warranties and controls

Agree to stronger risk-management conditions:

• Mandatory peer review of deliverables.
• Annual policyholder attestations.
• Use of specific contract provisions with clients.

Carriers often accept such contractual improvements in exchange for removing exclusions.

4) Use tailor-made endorsements

Common endorsements that buy back coverage:

• Fraud carve-back for innocent insureds (separates dishonest employee from innocent co-workers).
• Named insured vs. insured carve-back to restore coverage for suits between insureds in certain circumstances.
• Limited punitive damages coverage where allowed by state law.

5) Leverage specialty or excess carriers

If the admitted market won’t budge, surplus lines carriers (Chubb, certain Lloyd’s syndicates) may offer broader forms at higher cost. Use excess layers to add coverage above a primary policy that contains exclusions.

6) Contract negotiation with clients

Shift risk via contract language:

• Narrow indemnity obligations you sign (cap liability, carve out insured’s negligence).
• Require mutual indemnities and specify which insurance responds first.

See practical guidance on managing contractually-assumed liabilities: Contractually Assumed Liability: How Professional Liability Insurance (Errors & Omissions) Treats Indemnities

Sample negotiation checklist (take to broker/carrier)

• Provide 5 years of loss runs.
• Present client contract templates and propose a “mutual indemnity” clause.
• Request precise exclusion deletion/wording in writing.
• Offer a $25k–$50k premium loading or increased retention if deletion accepted.
• Propose specific risk controls (peer review, checklists).
• Ask for endorsement wording to be submitted for underwriting approval before binding.

Sample endorsement language to request

• “Notwithstanding Exclusion X, this policy shall cover claims alleging negligent acts or omissions by the Insured arising out of [describe service/project], subject to a $250,000 sublimit and an additional premium of $X.”
• “The insurer agrees to a carve-back for punitive damages where recovery is compensatory in nature or where punitive damages are insurable under applicable law.”

Work with counsel to refine language; carriers will insist on precise wording.

Carrier comparison (indicative pricing for a small professional firm, $1M/$1M)

Prices vary significantly by state — e.g., NYC and San Francisco tend to be on the higher end of ranges while Minneapolis typically trends lower for comparable exposures. For more on average costs, see Insureon analysis: https://www.insureon.com/professional-liability-insurance/cost

When carrier refuses — next steps

• Escalate to underwriting management with a documented rebuttal (controls, revenue breakdown, claims history).
• Seek alternative market placement (surplus lines or specialty MGAs).
• Obtain a written declination or restrictive endorsement for future disputes.
• If an exclusion later leads to a denial, follow a structured claims dispute path: notify carrier, preserve evidence, hire coverage counsel. See: When Exclusions Trigger a Coverage Dispute: Steps to Manage a Professional Liability Insurance (Errors & Omissions) Claim

Practical examples by location (illustrative)

• New York City consultant (1–3 staff): Expect $1,200–$3,500/year for $1M/$1M; higher for tech/software E&O exposures.
• San Francisco SaaS consultant: $1,300–$3,800/year, cyber endorsements often needed.
• Minneapolis small design firm: $800–$2,200/year; carriers may offer better terms with strong project controls.

(These ranges are illustrative using market data from carriers and brokers; actual quotes vary by firm specifics — see Insureon and carrier sites.)

Final tips for a successful negotiation

• Be factual and organized. Underwriters want measurable risk reduction, not promises.
• Use a broker with carrier relationships in your niche.
• Consider paying modest additional premium for a tailored endorsement — often cheaper than legal fights later.
• Document everything — every concession, endorsement draft, and underwriting approval should be in writing.

For a deeper dive into common exclusions and how to spot them, read: Top Exclusions in Professional Liability Insurance (Errors & Omissions) and How to Spot Them. To explore endorsements that frequently close gaps, see: Endorsements to Close Common Gaps in Professional Liability Insurance (Errors & Omissions).

If you need sample endorsement drafts or a negotiation letter template tailored to your city and profession (e.g., NYC architect, SF software consultant, Minneapolis engineer), provide your firm size, claims history, and the exact exclusion language and I’ll draft editable text you can present to underwriters.