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Professional liability insurance cost
The cost of professional liability insurance, also called errors and omissions insurance (E&O), varies based on a number of factors about your business. Your premium is directly impacted by the type of work you do, industry risks, and more.
What is the average cost of professional liability insurance?
Small businesses pay an average of $88 per month, or $1,051 annually, for professional liability insurance. Annual premiums range from under $400 to over $7,000 per year.
Our figures are calculated using the median cost of policies sold by leading insurance companies to Insureon's small business customers. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.
Because this policy covers professional negligence claims, the premium depends on how vulnerable your profession is to these kinds of lawsuits. Other factors like your business location, revenue, and number of employees can also affect the cost.
Insureon's small business customers pay an average of $88 monthly for professional liability insurance.
Annual premiums range from under $400 to over $7,000 per year. Among our customers, 32% pay less than $50 per month for their policies, and another 39% pay between $50 and $100 monthly.
Insurers look at several factors when calculating your premium, including your business's unique risks and the amount of coverage you choose.
Find free professional liability insurance quotes for your small business
Factors that impact professional liability insurance rates
Professional liability costs depend on a number of factors, including:
- Policy limits and deductible
- Types of coverage
- Business location
- Claims history
- Industry risks
- Number of employees
- Business income
Policy limits and deductible
Suppose you want a professional liability policy that covers more expensive lawsuits. In that case, you’ll need higher limits—which will increase your premium.
The limits on professional liability insurance coverage vary significantly, from $250,000 to $2 million or more. A policy with $1 million / $1 million limits is the most popular option for small businesses.
This includes:
- $1 million per-occurrence limit. While the policy is active, the insurer will pay up to $1 million to cover claims from a single incident.
- $1 million aggregate limit. During the lifetime of the policy, the insurer will pay up to $1 million to cover all claims.
Among Insureon customers, the majority (63%) choose a professional liability policy with $1 million / $1 million limits. Nine percent choose a policy with $2 million / $2 million limits, the next most popular choice.
When buying a policy, you can choose a higher deductible to save money. However, if you can’t pay the deductible, your insurance won’t activate to cover your claim. The average deductible that Insureon customers select for professional liability insurance is $2,500.
Additionally, you could buy excess liability insurance to increase your coverage limits.
The right amount of coverage depends on your business needs. You want a policy that can pay for a potential lawsuit, without spending more than you need. A licensed insurance agent can help you choose limits and make sure you get the best coverage for your needs.
Types of coverage
The types of coverage you purchase will impact your costs. Some industries may need more protection or different coverage options, depending on the risks they face.
Professional liability is often available as an endorsement to a general liability policy or a business owner's policy (BOP). General liability insurance covers legal fees from third-party accidents, while a BOP bundles general liability with commercial property insurance at a discount.
Tech companies often buy professional liability together with third-party cyber insurance in a policy called technology errors and omissions insurance, or tech E&O. This protects them against lawsuits related to data breaches.
The right amount and type of cyber insurance for your business depends on several factors, such as whether your company stores customer information or provides cybersecurity to clients.
Your business may need certain limits or endorsements to meet the requirements for a specific project or client, and this can also affect your costs.
Business location
Your business location can impact your professional liability insurance rates.
State laws sometimes require a specific amount of professional liability coverage if you work in a certain industry, such as healthcare or law, which determines how much you pay.
Real estate is another industry that is often mandated to carry professional liability. For example, real estate agents in Wyoming and Colorado must carry E&O in order to get licensed.
Below are some examples of average professional liability insurance costs across different states for Insureon policyholders:
| State | Professional liability insurance cost |
|---|---|
$82 per month | |
$71 per month | |
$71 per month | |
$83 per month | |
$78 per month | |
$67 per month | |
$72 per month | |
$70 per month | |
$62 per month | |
$63 per month |
Professional liability insurance requirements in your state
Select your state to learn about professional liability and other insurance requirements for your small business.
Claims history
One major factor that contributes to how much your professional liability insurance will cost is your claims history. This includes both the frequency and the severity of your claims.
Your claims history refers to how many times you've had incidents covered by insurance in the past. Frequent and expensive claims will often mean higher premiums since insurance companies will see your business as a higher risk.
Risk management and avoiding claims is critical to keeping your costs low. Businesses with a clean history of claims often benefit from lower rates and other discounts.
Focusing on employee training, regular maintenance, safe businesses practices, and quickly managing safety risks can keep your overall insurance costs as low as possible.
Industry risks
Our analysis of professional liability insurance costs reveals that for small businesses, your industry has the biggest impact on your premium. Generally, insurance companies charge higher premiums to industries that are more likely to face claims, while lower-risk industries enjoy lower rates.
For example, building designers, such as architects and engineers, pay $142 on average per month. A mistake in these areas could lead to an expensive lawsuit if a building is flawed or unsafe.
Professionals who are less likely to face a costly negligence lawsuit, such as photographers and accountants, pay an average of $42 monthly.
Depending on your state and your profession, you may need professional liability insurance to get licensed or to work in your field. Insurance agents and doctors, for example, sometimes need coverage to comply with state laws.
The chart below illustrates how the type of business you have affects what you'll pay for a professional liability insurance policy.
Top industries we insure
To see insurance costs for businesses in your industry, visit our industry-specific cost analyses.
Number of employees
The number of people in your employ can impact your insurance costs.
The bigger the workforce, the greater the likelihood of an incident that requires an insurance claim.
Insurance companies view more employees as increased chances of incidents, accidents, and other claim-causing risks.
Independent contractors and other self-employed individuals can expect lower premiums for professional liability than businesses with employees.
Business income
Higher business income often equates to higher professional liability premiums for the average small business.
For example, the more jobs and contracts you take on, the greater the likelihood of running into an error, accident, or other misstep, which can cause a lawsuit or professional liability claim.
Smaller, less profitable companies often have lower insurance costs than larger, highly profitable businesses.
Taking on more work, increasing your business capabilities, and generally growing your profits can lead to an increase in your professional liability insurance costs.
Does my business need professional liability insurance?
Professional liability insurance is a must-have for small businesses that provide expert advice or specialized services, such as IT consultants or security guards. You may see it referred to as errors and omissions (E&O insurance), professional indemnity insurance, or malpractice insurance depending on the industry.
Experienced professionals can still make mistakes or oversights, or give advice that causes financial loss for a client. If the client sues, legal costs can escalate to the point where they could sink your business.
Even if you've done nothing wrong, you're not immune to lawsuits. For example, your business could lose a key individual who you need to complete a project on time, or a client could sue over a budget overrun that was out of your hands.
When someone sues your business—even if it's a frivolous lawsuit—you'll have to pay legal defense costs, such as the cost of hiring an attorney. If you lose the suit, you could end up paying a fortune in a court-ordered judgment or a settlement.
A professional liability policy covers all of these costs, which could save your business from bankruptcy. Because the premium is based upon your level of risk and your industry, many small businesses pay only a small monthly premium for this type of insurance.
For more information about professional liability insurance, check out Insureon's professional liability FAQs.
How can you save money on professional liability insurance?
There are a few steps you can take to help reduce your professional liability premium and avoid expensive rates:
Shop around. Insurance companies offer a range of professional liability premiums and coverages. Get quotes from different carriers with Insureon's easy online application.
Pay your entire premium upfront. Policyholders can choose to pay insurance premiums once a month or once a year. While making a smaller payment each month requires less money upfront, it may cost more in the long run. Insurers often offer discounts to businesses that pay an annual premium.
Bundle policies. Depending on your industry, it's sometimes possible to bundle professional liability insurance with another policy, such as general liability insurance. Insurance bundles often cost less than purchasing each policy separately.
Keep continuous coverage. Continuous coverage is key if you don't want to pay out of pocket for a professional liability lawsuit. While it’s possible to purchase coverage only for the duration of a project, this cost-cutting strategy can backfire for professional liability and other claims-made policies. To file a claim, your insurance must be active:
- When an alleged mistake occurs
- When the claim is filed
Reduce your risks. Your professional liability claims history is a big factor when calculating your premium, which is why it's important to avoid lawsuits in the first place. Many professional liability lawsuits stem from client disputes. To reduce the risk of a lawsuit, you can:
- Strive to meet the standard of care for your industry
- Communicate clearly, especially when an issue arises
- Document all contracts and communications with clients
Why do small business owners choose Insureon?
Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare quotes from top-rated providers, buy policies, and manage coverage online.
By completing Insureon’s easy online application today, you can get free quotes for professional liability insurance and other business insurance policies from top-rated U.S. insurance companies.
Our licensed insurance agents can help you look into a variety of other policies, including commercial auto insurance, general liability coverage, and workers' compensation insurance. The right policies can protect your business from expenses related to common issues such as a bodily injury or property damage.
Once you find the right policies for your small business, you can begin coverage and receive a certificate of insurance for your small business, often within 24 hours. You'll have peace of mind knowing your business is protected from some of the biggest small business risks.
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Updated: February 13, 2026
The average costs on this page were derived from our data on 40,000 small business owners who purchased policies through Insureon. Most of our customers have fewer than five employees, annual revenue ranging from less than $50,000 to more than $200,000, and have been in business for five years or less.