Switching Carriers: How to Move Between Claims-Made and Occurrence Professional Liability Insurance (Errors & Omissions) Safely

Switching between claims-made and occurrence professional liability insurance (Errors & Omissions, E&O) is one of the most critical decisions a professional services firm in the United States can make. The wrong move can leave you exposed to prior-act claims or saddle you with unexpectedly high tail costs. This guide — targeted to businesses operating in major U.S. markets (New York City, Los Angeles, San Francisco, Chicago, Houston, and nationwide) — explains safe transition strategies, expected costs, insurer examples, and an actionable checklist you can use when changing carriers.

Quick primer: Claims-made vs occurrence (as it affects switching)

• Claims-made: Covers claims first made against you during the policy period — often cheaper initially but requires continuous coverage or purchase of tail coverage to protect prior acts.
• Occurrence: Covers incidents that occurred during the policy period regardless of when the claim is reported — typically higher premium but avoids tail exposure.

For broader background, read: Claims-Made vs Occurrence: Choosing the Right Professional Liability Insurance (Errors & Omissions) Trigger.

Why switching matters (real-world stakes)

• A New York-based consultant who bought claims-made E&O for three years then canceled without tail coverage can face a claim reported years later for work performed during those earlier years — and that claim will not be covered without extended reporting.
• In California (e.g., San Francisco, Los Angeles) where professional disputes often lead to late-filed claims, occurrence policies eliminate the need for tail, but at a higher upfront cost.

Key risk drivers:

• Prior acts exposure (retroactive date gaps)
• Contractual requirements (clients requiring occurrence or continuous claims-made)
• Regulatory investigations that report late

See more on handling prior acts: Handling Prior Acts and Retroactive Exposure in Professional Liability Insurance (Errors & Omissions).

Step-by-step safe transition process

1. Inventory exposures and contracts

   • List all client contracts with E&O requirements (some require occurrence or continuous claims-made).
   • Identify engagements with long tail risk (architecture, accounting, financial advisory).

2. Obtain a detailed loss run and prior policy declarations

   • Request loss runs from current carrier and confirm retroactive date.
   • Confirm whether any endorsements or limitations exist.

3. Compare quotes including tail and nose options

   • Get quotes for:
     • Occurrence policy with equivalent limits
     • Claims-made policy + tail (extended reporting endorsement)
     • Claims-made with nose (if moving to new claims-made and you request prior acts coverage from new carrier)

4. Negotiate retroactive date and nose coverage

   • Ask the new claims-made carrier to accept your prior retroactive date (“nose” or prior-acts coverage) where possible.
   • If not, calculate tail costs.

5. Budget for tail costs and timeline

   • If you cancel claims-made, buy tail or keep the claims-made policy in force.
   • If moving to occurrence, you may still want to keep claims-made until occurrence takes effect to avoid gaps.

6. Document the transition in writing

   • Obtain written confirmation of effective dates, retroactive dates, and any endorsements.

7. Update client contract language where needed

   • Notify clients if insurance form changes are material to contract obligations.

Cost expectations: premiums, tails, and nose coverage

Below are commonly observed U.S. market figures (approximate ranges; final prices depend on revenue, profession, prior claims, and state):

• Typical small/mid-size professional firm E&O (1M/1M limits):

  • Annual premium range: $400 – $3,000 for many consultants, IT firms, and small professional services (varies by state and risk).
  • Higher-risk professions (architects/engineers, large financial advisers): $5,000 – $25,000+.

• Tail (extended reporting) cost:

  • Common rules of thumb: 100% – 300% of the last annual premium for an unlimited tail; sometimes sold as a multi-year tail at a fraction (e.g., single-year tails 20–50% per year).
  • Example: if last annual premium = $2,000, expect unlimited tail in the range $2,000 – $6,000 (varies heavily by carrier and risk profile).

• Nose (prior-acts) coverage:

  • Often offered by new carrier for a negotiated fee or included; when sold separately it can be similar to 1–3 years of premium depending on underwriting.

Examples from U.S. providers (indicative):

• Hiscox (US): advertises small-business professional liability starting at low hundreds per year for qualifying firms (Hiscox online quotes vary by state and occupation) — see their quote engine for specifics in New York, California, Texas. (source below)
• Insureon (marketplace): shows typical professional liability quote ranges for small firms in NYC, LA, Chicago and local markets with sample quotes often between $300–$1,200 annually for $1M/$1M for low-risk consultants. (source below)
• Major carriers with robust E&O programs: Chubb, CNA, The Hartford, Travelers — pricing tends to be higher for admitted markets and specialized professions. For example, Chubb and CNA typically underwrite higher layer and larger limit exposures (5M+ limits) and charge commensurately.

Sources for pricing context are listed at the end — always obtain tailored broker quotes for Los Angeles, San Francisco, New York City, Houston, and Chicago before acting.

Comparative table: Transition options at a glance

Negotiation tactics and questions to ask carriers

• "Will you accept my current retroactive date? If not, what prior-acts/nose coverage can you include and at what cost?"
• "If I switch, can you provide a written endorsement guaranteeing prior acts coverage for the dates X–Y?"
• "What is the estimated premium increase going from claims-made to occurrence for a firm in [New York City / Los Angeles / Chicago] with revenue $X?"
• "If I buy a tail, is it unlimited or for a limited period (e.g., 3, 6, 12 years)?"

For more on negotiating retroactive dates, see: How to Negotiate Retroactive Dates in Professional Liability Insurance (Errors & Omissions) Renewals.

Practical checklist before you switch (printable)

• Obtain current policy declarations, retroactive date, and loss runs
• Get written quotes for: occurrence, new claims-made + nose, tail from current carrier
• Calculate total first-year and 3-year costs (including tail) and compare
• Confirm contractual client requirements for insurance form and limits
• Secure written endorsements for retroactive/prior acts if accepted
• Update internal risk management and contract templates
• Notify clients where required by contract

Also see: A Practical Checklist for Evaluating Claims-Made vs Occurrence Professional Liability Insurance (Errors & Omissions).

Location-specific notes (U.S. focus)

• California (San Francisco, Los Angeles): higher litigation frequency can increase claims-made premium and tip many firms toward occurrence if they have deep prior exposure. Watch state licensing or regulatory nuances in construction and tech contracting.
• New York (NYC): higher defense costs and plaintiff awards push premiums up; carriers price according to NYC exposure.
• Texas (Houston, Dallas): competitive market for admitted coverage; premium differences between claims-made and occurrence can be narrower for some professions.
• Illinois (Chicago): professional liability for architects & engineers often carries specialty underwriting; occurrence may be harder/expensive to find at small limits.

Final recommendations

• Do not cancel a claims-made policy until you have:
  • Committed occurrence coverage effective the same day OR
  • Purchased an adequate tail OR
  • Secured written nose/prior-acts coverage from your new claims-made carrier.
• Use a broker experienced in E&O transitions (e.g., brokers who place business with Hiscox, Chubb, CNA, The Hartford, Travelers, Insureon marketplace).
• Run the numbers: cost of tail + new policy vs cost of occurrence policy over a 3–5 year horizon.

For a deep dive on tail specifics and extended reporting, review: What Is Tail Coverage? Managing Extended Reporting for Professional Liability Insurance (Errors & Omissions) Policies.

Sources and further reading

• Insureon — Professional Liability (E&O) cost guidance and sample quotes: https://www.insureon.com/professional-liability-insurance/cost
• Hiscox USA — Professional liability (E&O) product information and small-business pricing examples: https://www.hiscox.com/small-business-insurance/professional-liability-insurance
• NerdWallet — Errors & Omissions insurance: what it costs and why: https://www.nerdwallet.com/article/small-business/errors-and-omissions-insurance-cost

(Prices and ranges above are market-based approximations — always obtain tailored quotes for New York City, Los Angeles, San Francisco, Chicago, Houston, or other U.S. locations before making coverage changes.)