How Much Does Professional Liability Insurance Cost?

Errors can be costly for businesses, especially without professional liability insurance (also known as errors and omissions insurance).

It protects against lawsuits due to mistakes and is crucial for fee-for-service businesses like accountants, architects, and financial advisors.

Some states require lawyers and certain medical professionals to have this coverage.

Professional Liability Insurance
Professional liability insurance costs: Photo source (NerdWallet)

Business owners typically spend $500 to $1,000 per employee annually on professional liability insurance, with costs varying by industry and job type.

According to estimates from The Hartford.

Factors that affect the cost of professional liability insurance


Risk levels and financial impacts of mistakes vary by profession, influencing insurance rates.

Therefore, engineers generally pay more for professional liability insurance compared to fitness instructors due to these factors.

Coverage limits and deductibles

Professional liability coverage limits vary from $250,000 to millions, with higher limits leading to pricier premiums.

Opting for a lower deductible increases your premium.

When choosing limits, weigh the annual policy cost against potential lawsuit expenses.

Aim for adequate coverage to handle damages and defense costs.

A common policy has a $1 million coverage limit (per occurrence and aggregate), covering up to $1 million for a single claim or throughout the policy’s duration.


Expect higher premiums if you work in a city with high claim rates or legal costs.

Number of employees

The more employees you have, the greater the odds that one of them will make a mistake resulting in a lawsuit. Your professional liability costs will reflect the increased risk.

Years in business

Startups should expect higher professional liability premiums than more established companies. But as your business gains experience, your insurance costs should decrease, provided you maintain a clean claims history.

Claims history

A track record of prior professional liability claims is a major red flag for insurers. When it comes to business insurance, red flags equal higher premiums.

How to save money on professional liability insurance

While certain factors affecting professional liability costs are beyond your control, you can reduce your overall policy expenses by:

  • Paying your premium upfront: Insurance companies often provide discounts when you pay your annual premium in a lump sum rather than monthly.
  • Adjusting your deductible and coverage limits: Choosing a higher deductible or lower coverage limits can lower costs, but ensure your deductible is affordable and your policy adequately covers potential claims.
  • Bundling your policies: Combining your professional liability policy with other business insurance coverage can lead to overall cost savings.
  • Maintaining a clean record: Uphold high standards of quality and attention to detail to prevent professional liability claims.

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