Professional Liability Insurance
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How much does professional liability insurance cost?

Professional liability insurance, also known as errors and omissions insurance (E&O), protects your small business from the financial risks of professional mistakes. Any business that provides professional services or offers advice, like consultants, should consider this coverage. Your industry and the scope of your services affect the cost of this policy.

What is the average cost of professional liability insurance?

Regardless of insurance policy limits, the median cost of professional liability insurance for a small business is $59 per month ($708 annually). The median cost offers a more accurate estimate of what your business is likely to pay than the average cost of business insurance because it excludes outlier high and low premiums.

Most small business owners (51%) pay between $500 and $1,000 per year for their policies, and 18% pay less than $500. These figures were derived from an analysis of thousands of insurance policies purchased by Insureon small business customers.

Cost of professional liability insurance for Insureon customers.

How professional liability insurance protects your business

How does your industry impact the cost of professional liability insurance?

Your type of business and the industry you work in have a significant impact on the cost of professional liability insurance, since different professionals are exposed to different liabilities. On average, higher risk industries pay higher premiums, while low-risk industries enjoy lower rates.

A building design business, for example, usually pays higher premiums than an accounting business because a construction mistake could lead to bodily injury as well as financial loss. Those working in media and advertising also pay high premiums, since an advertising agency's work directly impacts a client’s bottom line.

Median annual cost of professional liability insurance by industry.

To see insurance costs for businesses in your industry, visit our industry-specific cost analyses:

Compare professional liability insurance quotes for your business

How do coverage limits affect professional liability insurance costs?

If you want a professional liability insurance policy that pays out more per incident or per year, you’ll need to increase your amount of coverage – which means you’ll pay a higher premium to your insurance company.

The limits on professional liability policies vary significantly, from $250,000 to $2 million. Most Insureon customers (61%) purchase a $1 million / $1 million professional liability policy. This includes:

  • $1 million per-occurrence limit. While the policy is active, the insurer will pay up to $1 million to cover any single claim.
  • $1 million aggregate limit. During the lifetime of the policy (usually one year), the insurer will pay up to $1 million to cover all claims.
Professional liability insurance limits for Insureon customers.

Tips for saving money on professional liability insurance

Pay your entire premium upfront. You can choose to pay your 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 since insurers often offer discounts to businesses that pay an annual premium.

Keep continuous coverage. While it’s possible to purchase professional liability coverage when you start a project and drop coverage when you complete the project, this cost-cutting strategy can backfire. To collect insurance benefits, your “claims-made” professional liability policy must be active:

  • When an alleged mistake occurs
  • When the claim is filed

Continuous coverage is key if you don't want to pay out of pocket for professional liability lawsuits. Learn more about claims-made insurance coverage.

Learn more about business insurance costs

Updated: August 2, 2022
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