Your Client Will Not Delete the Insurance Clause. Negotiate the Limit and the Trigger Instead.
The clause demands professional errors and omissions cover at a limit set by formula, the higher of a flat figure and a multiple of the project budget. Then the same again on liability. Then two more covers you have never been asked for before. Against your fee, none of it looks proportionate, so you ask them to take the clause out.
They will say no, and the request will have cost you the two weeks you could have spent moving the parts that actually move.
This page sets out which four elements of an insurance clause are negotiable in Malaysian client contracts, and what to ask for instead of deletion.
Key Facts: Negotiating a Contract Insurance Clause in Malaysia
What is actually negotiable? The limit, the trigger, the duration or tail, and the evidence you must produce. The cover type moves least, because that is the thing your client is afraid of.
Who needs to do this? Any Malaysian supplier signing with a client whose insurance schedule was drafted for much larger counterparties. Agencies, production and creative businesses, consultancies and software vendors meet it most often.
What drives the cost of accepting a clause as drafted? The limit, the number of covers named, and above all any requirement to keep cover running after the work ends. A tail on a claims-made policy is priced as a multiple of annual premium, and one Malaysian technology professional indemnity wording currently in the market (2025 edition) offers a supplementary extended reporting period at up to 100% of annual premium for one year and up to 175% for three years, at clause 5.16.
Is any of this required by Malaysian law? No. Professional indemnity, errors and omissions and production covers are contractual demands. The instrument imposing them is your client's agreement, which is precisely why the terms are open to discussion.
What is the single most important thing to fix? The trigger. A clause asking for errors and omissions cover on an occurrence basis is asking for a structure the product is not written on, and signing it creates a gap that was drafted in rather than underwritten in.
Last verified: August 2026. Checked against the Financial Services Act 2013 and a Malaysian technology professional indemnity wording currently in the market, 2025 edition.
Sitting on a clause you were about to ask them to delete?
Send it over first. You will get back which parts are standard, which are drafting errors, and which are worth pushing on. Most of this sits around professional indemnity insurance.
Why deletion requests fail
The clause is in the template because someone senior decided the company would not accept that risk from suppliers. The person you are emailing usually cannot remove it, and asking them to means asking them to seek an approval that reflects badly on them.
A request to reduce a limit, or to correct a trigger that does not match the product, is a different kind of request. It can often be granted by the person holding the file, and it makes you look like a supplier who has read the document.
This table sets the two approaches against each other.
| Your ask | Who has to approve it | Likely outcome |
|---|---|---|
| "Please delete the insurance clause" | Legal or risk, above the contract owner | Refused, with delay attached |
| "The formula produces a limit far above the contract value. Can we set a flat figure instead?" | Usually the contract owner | Frequently granted, sometimes at a compromise figure |
| "E&O is written claims made in Malaysia. Can the trigger read 'claims made' rather than 'each occurrence'?" | The contract owner, usually with one question back | Generally accepted. It is a correction, not a concession |
| "Can we send a certificate now and the full policy within 30 days?" | The contract owner | Often accepted where timing is the only problem |
The trigger: the ask that matters most
The phrase to search your contract for is this one.
"for each occurrence giving rise to a claim"
It is standard drafting, it appears in Malaysian client agreements regularly, and attached to a professional indemnity or errors and omissions requirement it is wrong.
Professional indemnity and technology errors and omissions cover in Malaysia is written on a claims-made basis. The policy responds to claims brought against you while it is in force, not to occurrences during a policy year. A supplier who signs an occurrence requirement and later has a claim declined on the trigger is in a gap no insurer created.
Ask for the wording to be corrected, and send the replacement language rather than only flagging the problem.
Three more asks that look aggressive and are usually just drafting
These recur in Malaysian client contracts. Each has a clean replacement that gives the client what the clause was reaching for.
| As drafted | Why it does not work | Ask for this instead |
|---|---|---|
| The policy must contain no material exclusions | No policy in existence complies. Every wording is built from exclusions, so a supplier warranting this warrants something untrue at signature | A commitment to disclose the material exclusions on your policy, and to notify the client if they change at renewal |
| The client to be named as a beneficiary on each policy | Beneficiary is a life and personal accident concept. On a liability policy it produces a certificate the client cannot use | The mechanism you can actually deliver: noted interest, additional insured status, or a principal's indemnity extension. They do different things, so pick deliberately |
| Cover maintained for a period of years after the delivery date | This is a run-off requirement, often written by someone who did not know they were writing one | Either continuous renewal, which is usually cheaper, or an explicit acknowledgement that a replacement claims-made policy with an equal or earlier retroactive date satisfies it |
What a two-year tail actually costs
The tail is the most expensive line in the clause and the one suppliers price at zero. On a claims-made policy there are three ways it can be satisfied, and they cost very different amounts.
This table shows the mechanics as they appear in a Malaysian technology professional indemnity wording currently in the market, 2025 edition. These are contractual terms in that wording, not a quotation and not an indication of what you will pay.
| Route | Mechanism | Cost basis in the wording |
|---|---|---|
| Keep renewing | Maintain the policy with the retroactive date intact | Your ordinary annual premium, which usually reflects your current revenue |
| Basic extended reporting period | Clause 6.1.1: where the policy is not renewed, a circumstance may still be notified within 90 days after expiry | Included, but 90 days is far short of a two-year contractual tail |
| Supplementary extended reporting period | Clause 5.16, purchased after expiry | Up to 100% of annual premium for one year, up to 175% for three years. Fully earned and non-refundable |
Two conditions in that clause change the answer for most readers. The supplementary period must be requested and paid for within 30 days after expiry, and it is not available where you have taken out another claims-made policy with a retroactive date equal to or earlier than the expiring one.
The second condition is the useful one. If you keep buying professional indemnity from anyone and preserve the retroactive date, you generally do not need to buy a tail at all. Say that to a client asking for two years of run-off, and offer continuous cover instead.
Winding down, selling, or finishing a project with a tail obligation?
The 30-day window after expiry is what people miss. Talk to us before your renewal date, not after it. We handle this alongside SME business insurance for owner-managed firms.
If your insurer says no
The tail is the point where a supplier and an insurer most often disagree, usually over whether the request arrived inside the 30-day window. A small Malaysian business is not out of options there.
Disputes with a licensed insurer go to the Financial Markets Ombudsman Service (FMOS), which since 2025 is the body previously known as the Ombudsman for Financial Services. Eligibility and the monetary limit are set by the Rules of the FMOS, and small businesses are within scope, so check the current Rules on the FMOS site before assuming your firm qualifies.
Two things follow. Keep the dated correspondence, because the timing of your request is what the argument will turn on. And check your eligibility early, because it depends on your size and a larger firm has to resolve the same dispute another way.
The clauses not worth arguing about
Two provisions look harsh and are usually not worth spending negotiating capital on. Knowing which fights to skip is half of this.
| Clause | Why it reads as harsh | Why to leave it |
|---|---|---|
| Insurance does not reduce your obligation to indemnify, and you carry deductibles and anything above the limit | It says out loud that the limit is a floor, not a ceiling | This is the legal position anyway. The clause makes it visible rather than creating it, and asking to remove it invites a conversation about raising the limit |
| You must not do or fail to do anything that may cause the insurances to lapse or become void or voidable | Open-ended, and a breach is a contract breach as well as a coverage problem | It restates duties you already owe your insurer, including the disclosure duty in Schedule 9, paragraph 4(1) of the Financial Services Act 2013 |
The better response to both is to raise your own limit deliberately rather than argue about who carries the excess. The contract has already told you the answer is you.
When to raise each ask
Timing decides how much of this you get. This table shows when each ask lands best and what leaving it costs.
| Ask | Best moment | Cost of leaving it |
|---|---|---|
| Correct the trigger | First mark-up, with replacement wording attached | After signature it is no longer a correction, it is a variation |
| Resize a formula limit | As soon as you know the value the formula multiplies | You will be quoting against the higher figure, and pricing it into a fee already agreed |
| Clarify the tail | Before signature, and again at your renewal | The purchase window for a supplementary extended reporting period closes 30 days after expiry |
| Fix the additional-insured mechanism | When you request terms from your insurer, not when the certificate is due | A rejected certificate at the deadline, with no time to re-endorse |
| Adjust the evidence deadline | At signature, once you know real placement timescales | Asking for an extension is a worse conversation than agreeing a workable date |
How to write the ask
Short, specific, and offering replacement wording. Requests that arrive with a solution attached get answered faster than requests that arrive as objections.
| Do | Do not |
|---|---|
| Name the clause number and quote the phrase you want changed | Ask for "the insurance section" to be reviewed |
| Explain in one sentence why the Malaysian product does not match the wording | Argue that the cover is expensive. Cost is your problem, and saying so invites a no |
| Offer the replacement wording in full | Leave the other side to draft it, which adds a week |
| Bundle all your asks into one email | Send them one at a time over three weeks |
| Say what you will provide instead, and when | Ask for deletion and hope |
FAQ
Can I ask a client to remove an insurance clause from a contract?
You can ask, and the answer is usually no. The clause normally sits in a template approved above the person you are dealing with, so removing it requires an escalation they have little reason to make. Asking to correct or adjust specific terms inside the clause is a far more productive use of the same conversation.
What does "for each occurrence giving rise to a claim" mean on a professional indemnity clause?
It asks for an occurrence trigger, meaning the policy would respond to events during the policy year regardless of when the claim arrives. Professional indemnity and technology errors and omissions cover in Malaysia is written claims made, responding to claims brought while the policy is in force. The two are not interchangeable, and the mismatch is worth correcting before signature.
Is a multi-year run-off requirement normal in Malaysian contracts?
Tails appear regularly, often without the drafter realising they have written one. Two years after delivery is on the longer side for a services engagement. The important thing is to identify it at drafting stage, because it changes what your cover has to do after the work ends.
What does run-off cover cost in Malaysia?
It is priced as a multiple of your annual premium rather than as a separate rate. One Malaysian technology professional indemnity wording currently in the market, 2025 edition, offers a supplementary extended reporting period at up to 100% of annual premium for one year and up to 175% for three, at clause 5.16. Your own wording may differ, so read your schedule.
Can I avoid buying run-off cover?
Often, yes. Under the wording referenced above, the supplementary extended reporting period is not available where you have taken out another claims-made policy with a retroactive date equal to or earlier than the expiring one, because that new policy already picks up the past work. Continuous renewal with the retroactive date preserved is the usual answer for a business that is carrying on.
My client wants to be named as a beneficiary on my liability policy. Is that possible?
Not in that form. Beneficiary is a life and personal accident concept and does not translate onto a liability policy. Offer the mechanism you can actually deliver, whether that is noted interest, additional insured status or a principal's indemnity extension, and confirm with your insurer which one they will endorse.
Should I agree that my policy will contain no material exclusions?
No policy can satisfy that, so agreeing means warranting something untrue from the moment you sign. Offer instead to disclose the material exclusions on your policy and to tell the client if they change at renewal. Clients accept this because it gives them the information the clause was reaching for.
Contingent Conclusion
An insurance clause is four asks wearing one number: the cover, the limit, the trigger and duration, and the evidence. Deletion attacks all four at once and fails. Correcting a trigger that does not match the Malaysian product, or resizing a formula limit that produces an odd number on a small project, succeeds regularly.
Find the tail first, because it is the one that costs real money and the one nobody prices. If you intend to keep trading and keep buying professional indemnity with the retroactive date preserved, you may already satisfy it, which is a much better answer than paying for a tail you did not need.
Contingent helps Malaysian businesses get the cover their contracts and landlords require. Whether you're comparing options or checking whether your existing policy actually does what the contract asks, we can help.
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Related reading: our guide to professional indemnity insurance in Malaysia, PI for IT consultants and software companies, PI for marketing agencies, insurance for content businesses, and public liability insurance.
Primary sources: the Laws of Malaysia portal of the Attorney General's Chambers for the Financial Services Act 2013, including Schedule 9, and the Financial Markets Ombudsman Service for the Rules of the FMOS.
Published by Contingent, the commercial insurance brand of Emerge Insurtech (Malaysia) Sdn. Bhd.
Disclaimer: This article describes how these policy terms commonly operate in the Malaysian market as of August 2026, with clause references drawn from wordings currently in use. Wordings differ between insurers and between policy years, and endorsements can delete or amend any clause described here. Always read your own schedule and endorsement pages, and consult a qualified insurance professional before relying on any of it.
