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Errors and Omissions Insurance
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How much does errors and omissions insurance cost?
The cost of errors and omissions insurance (E&O), also called professional liability coverage, depends on your industry and type of work. Small businesses pay about $61 per month for this policy.
What is the average cost of errors and omissions insurance?
Small businesses pay an average premium of $61 per month, or about $735 annually, for errors and omissions insurance.
Our figures are sourced from the median cost of policies purchased by Insureon customers from leading insurance companies. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.
Typical errors and omissions insurance costs for Insureon customers
While Insureon's small business customers pay an average of $61 monthly for errors and omissions insurance, 32% pay less than $50 per month for their policies, and another 39% pay between $50 and $100.
The cost varies for small businesses depending on their types of risks and the coverage they choose.
How E&O insurance protects your business
View video transcript.
No, no, no! My client's network was working just fine last week!
You made a mistake, yeah, you made a mistake. You made a mistake, and it doesn't matter what you say. You missed the boat, now you will have to pay!
Actually, you have errors and omissions insurance. It covers legal costs if you make a mistake and your client sues you.
Mistake! Mistake! Ohhh, this was a mistake! Mistake! Mistake! Ohhh, this was a mistake!
You can get all the coverage your business needs by following this link. Protection is peace of mind!
Understanding errors and omissions insurance cost factors
How do policy limits affect errors and omissions insurance costs?
If you want an errors and omissions insurance policy that covers more expensive lawsuits, you’ll need higher limits – which means you’ll pay a higher price.
The limits on E&O coverage vary significantly, from $250,000 to $2 million. Errors and omissions coverage 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 insurance company will pay up to $1 million to cover any single claim.
- $1 million aggregate limit. During the lifetime of the policy, the insurer will pay up to $1 million to cover E&O claims.
The majority of Insureon customers (63%) choose E&O insurance coverage with $1 million / $1 million limits. Nine percent of our customers choose an E&O policy with $2 million / $2 million coverage limits, the next most popular choice.
When buying a policy, it's a good idea to make sure the deductible is something you can easily afford. If you can’t pay for it in a crisis, your insurance won’t activate to cover your claim. The average deductible that Insureon customers select for errors and omissions insurance is $2,500.
The right amount of coverage depends on your business needs. You want coverage that'll cover a potential lawsuit, without buying more than you need. Chat with a licensed insurance agent if you're unsure which limits are right for your business.
How does your industry impact the cost of E&O insurance?
Our analysis of errors and omissions insurance costs reveals that for small businesses, your industry has the biggest impact on your premium. Generally, insurance providers charge higher risk businesses higher premiums, while lower risk industries enjoy lower rates.
For example, building design professionals, such as architects and engineers, are exposed to more risk than photographers or accountants. A mistake could lead to problems with the stability of a building, or cause an injury if a structure collapses.
Depending on your state and your profession, you may need E&O coverage to get licensed or to work in your field. That can include real estate agents, insurance agents, lawyers, and doctors.
The graph below illustrates how the type of business affects what you'll pay for an errors and omissions insurance policy.
Top industries we insure
To see insurance costs for businesses in your industry, visit our industry-specific cost analyses.
Don't see your industry? Don't worry. We insure most businesses.
E&O insurance provides affordable, necessary protection for professional services
Errors and omissions insurance is a must-have for small businesses that provide expert advice or services, such as IT consultants or professional services. You may see it referred to as professional liability insurance or malpractice insurance depending on the industry.
Experts can still make mistakes or oversights, or give professional advice that causes financial loss for a client. If the client sues, attorney’s fees, court costs, and other legal expenses 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, including 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.
An E&O 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 coverage.
How can you save money on E&O insurance?
It's possible to reduce your E&O premium through a few simple steps:
Shop around. Insurance companies offer a range of errors and omissions premiums and coverages. Compare 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 up front, 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 errors and omissions insurance with another policy, such as general liability insurance. For example, tech professionals can buy E&O insurance and third-party cyber liability insurance together in a bundle called tech E&O. This often costs less than purchasing each policy separately.
Keep continuous coverage. Continuous coverage is key if you don't want to pay out of pocket for E&O lawsuits. While it’s possible to purchase coverage when you start a project and drop coverage when you complete the project, this cost-cutting strategy can backfire for errors and omissions 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 errors and omissions claims history is a big factor when calculating your premium, which is why it's important to avoid lawsuits in the first place. Many errors and omissions lawsuits stem from client disputes. To reduce the risk of hefty legal fees, 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 errors and omissions insurance and other business insurance policies from top-rated U.S. insurance companies.
Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.
Learn more about business insurance costs
Insurance premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific policy.
Updated: October 31, 2023