How Much Does Professional Liability Insurance Cost?

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How Much Does Professional Liability Insurance Cost?

In 2017, we analyzed data from more than 18,000 businesses with 10 or fewer employees that applied for coverage through Insureon. We found that, regardless of industry or policy limits, the average yearly cost of Professional Liability Insurance for a small business is $1,735.60. The median yearly cost is $920. 

However, as you'll see below, most small-business owners who buy a policy through Insureon pay less than $1,000 per year, with about a third paying between $400 and $800.


Professional Liability Costs in Detail

Asking how much Professional Liability Insurance (aka E& O Insurance) costs is a bit like asking how much a car costs. The best answer is: it depends. Unlike with cars, though, most business owners don't even know the range of prices to expect when shopping for Professional Liability Insurance. This analysis is designed to fix that.

So while the cost of a policy depends largely on a business's industry, size, and day-to-day operations, it's still useful to look at average costs and cost ranges.  

What we found is that two factors have the biggest impact on price:

  • The policy limits a business chooses
  • A business's industry

We'll look at both, but let's start with how much Insureon customers pay for Professional Liability coverage.


What Do Small Businesses Pay for Professional Liability Insurance?

Insureon serves lots business types, which results in a range of annual Professional Liability premiums. See for yourself:

The most notable takeaway we saw? More than half of Insureon customers pay less than $1,000 per year in Professional Liability premiums. In other words, for less than $85 per month, most Insureon customers are able to get Professional Liability coverage.


Professional Liability Insurance: Policy Limits Drive Pricing

Every Professional Liability Insurance policy comes with two limits:

  • Occurrence limit: This is the maximum amount the insurer will pay for any one claim made during the life of the policy.
  • Aggregate limit: This is the maximum amount the insurer will pay in claims for the lifetime of the policy (usually one year).

Limits are often represented like this: occurrence / aggregate. So a $1M / $2M policy will pay up to $1 million for any one claim made during that period and up to $2 million for all claims during the policy's lifetime.

Because they determine how much coverage a business receives, policy limits have a huge impact on the cost of insurance. Some small-business owners choose limits based on their likely exposures; others may purchase coverage with higher limits because it is required in client contracts. The graph below shows how policy limits affect Professional Liability Insurance costs.

The policies that offer the most coverage cost the most, and those that offer the least coverage are less expensive.

So which policy limit do small businesses choose most often? The runaway winner among Insureon clients is $1M / $1M, which accounted for 58 percent of the Professional Liability policies we sold. As you can see in the chart below, 18 percent of businesses chose higher limits.

Here's a breakdown of the popularity of various Professional Liability limits:

You'll notice that 24 percent of businesses chose limits that fall into the "Other" category. This category includes policy types that run the gamut from very low-limit policies of $250k / $250k to policies with $5M / $5M limits.

Even when two businesses choose a policy with the same limits, though, that doesn't mean they'll pay the same price, as you can see in the chart below:

Why are some businesses paying $400 to $600 a year while others pay more than $1,000 for the same policy? Because their industry also affects the policy cost. Read on for details.


Professional Liability Insurance: Industry Drives Pricing

The other big factor that impacts the cost of Professional Liability Insurance is a business's industry. In order to show you an apples-to-apples comparison, we've laid out how much a policy with $1M / $1M limits costs for a variety of industries in the chart below.

Notice how architects and engineers pay a lot more for their insurance than business consultants. That's because if an architect or engineer makes a mistake, a building might collapse and people might die. If a marketing consultant messes up, it's likely that losses won't extend beyond lost revenue for their client. When the potential cost of a professional mistake is higher, the cost of Professional Liability Insurance is higher, too.


Dig Deeper into Insurance Costs

The type of insurance a business buys also impacts cost. Find out how much these insurance policies cost for small businesses.


To get a more nuanced view of what Professional Liability Insurance costs for businesses in your industry, take a look at these industry-specific cost pages.