What are the implications of decreasing my limit of liability?
• Decreasing your Limit of Liability should be exercised with great caution. You may indeed decrease your Limit of Liability mid term. However, should you decrease your Limit you need to understand that you are also decreasing your Limit for all of your Prior Acts (as E&O policies are written on a Claims made basis). For example: In 2004, you had a $5 million Limit of Liability–> In 2006, you had a $5 million Limit of Liability–> In 2007, you had a $5 million Limit of Liability In 2005, you reduce your limit to $1 million–> In 2007, you reduce your limit to $1 million–> In 2008, you reduce your limit to $1 million In 2005, you are served with a claim in the amount of $5 million (for an act committed in 2004)–> In 2007, you are served with a claim in the amount of $5 million (for an act committed in 2006)–> In 2008, you are served with a claim in the amount of $5 million (for an act committed in 2007) Your available Limit of Liability is $1M (as the policy is written on a Claims m
