How Much Coverage Do You Actually Need?

The most common question we get is also the hardest to answer in the abstract: how much professional liability should I carry? There is no universal right answer, but the decision is not arbitrary either. Five things genuinely move it.

What your contracts require. Start here, because it is the one input that is not a judgement call. Client agreements, franchise agreements, and professional bodies frequently specify a minimum limit. In some states and some professions, statute sets a floor. If a contract says $1M, the question of whether you'd have chosen $1M is academic.

What you would lose. A claim that exceeds your limit does not stop at the limit — it continues into your business and, depending on your structure, your personal assets. The relevant number is not your revenue; it is what is exposed if a defence and settlement run past what the policy pays.

How large the work is. A consultant advising on a $50,000 project and one advising on a $5,000,000 project carry very different downside, even with identical revenue and identical care. Size of engagement is often a better guide than size of firm.

How new you are. Early in a career there is less past work to be sued over — your retroactive date is recent and your exposure is genuinely smaller. That changes every year you practise, which is why a limit chosen in year one is worth revisiting in year four.

And what you can sustain. A limit you cancel in a lean quarter protects nobody. It is better to carry a limit you will keep continuously — because claims-made cover rewards continuity — than to buy a large limit for one year and let it lapse.

What should NOT drive the decision is what a competitor carries. You are not buying the same risk. The right limit is the one that covers your contractual obligations, matches the size of the work you actually do, and that you will still be paying for in three years.