How much professional liability insurance does my Georgia business need?

Most Georgia small businesses start with $1 million per claim and $1 million aggregate of professional liability, while larger firms or those in higher-risk fields carry $2 million, $5 million, or more. Professional liability, also called errors and omissions or E&O, pays to defend and resolve claims that your professional advice or services caused a client financial harm. The right limit depends on your industry, your contract sizes, and what your clients require.

The per-claim limit is the most the policy pays for any single claim, and the aggregate is the most it pays for all claims in a policy year. Choosing a limit means estimating the worst realistic financial damage a client could suffer from a mistake, then setting coverage at or above that level.

Factors that push the limit higher include:

• The dollar size of the projects or accounts you handle
• Contract requirements, since many clients mandate a minimum E&O limit before they hire you
• Your field, because professions like engineering, financial advising, and IT consulting carry larger potential damages
• How many clients rely on the same advice, which can multiply exposure

A common mistake is buying a low limit to save money, then discovering it does not cover a single large claim or meet a key client’s contract terms. Professional liability is one place where being underinsured can cost a business far more than the premium it saved.

For example, a Georgia IT consulting firm carries a $1 million E&O limit. A botched system migration causes a client $1.4 million in losses, and the client sues. The policy pays the first $1 million plus defense costs, but the firm owes the remaining $400,000 out of pocket. A $2 million limit would have covered the full claim for a modest increase in premium.

One thing to remember is that defense costs can be handled two ways. On some policies, legal defense is paid in addition to your limit, while on others the defense costs eat into the limit, leaving less to pay a settlement. A long lawsuit can run up large legal bills, so a policy that pays defense outside the limit effectively gives you more protection for the same number on the page.

The right number balances your real exposure, your contracts, and your budget. We can match your E&O limit to your actual risk with a free coverage review at our coverage review page.