I don't think anyone maintains enough E&O coverage to handle a claim of $40 or $50 million. Probably because very few deals are really done at that level and the underwriter knows that it will be on the hook for that amount - they assume a certain amount of risk. That is why agents are only authorized upto a certain amount and their underwriter generally has to approve anything that exceeds it.

But, there are many more deals done in the $500,000 to $1 million dollar range. This client could be requiring that coverage becasue they do more transactions over $500,000, or it could just be that their underwriter requires them to carry that much, so they want to know that their abstractors have at least the same limits.

Either way, its a business decision for them and for you. If they feel they have that much risk, they can certainly require their abstractors to carry the extra coverage. But, if they aren't sending enough work to their abstractors to justify it, they may have a tough time getting the work done.

I carry $1 million in coverage. We don't do a lot of work that justifies it, but we have done a few large commercial searches and there are still some homes around here in that price range.

Best,
Robert A. Franco
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