How Much Does Professional Liability Insurance Cost?

Key Takeaways

• Professional liability insurance is also known as errors and omissions (E&O) insurance for most professionals, and malpractice insurance for medical and dental providers.
• The average cost of professional liability insurance typically ranges from $240–$1,200 per year, but varies widely depending on your industry, revenue, location, claims history, and other factors.
• Higher coverage limits increase protection but also raise professional liability insurance costs.

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If you’ve ever had to lean on an insurance policy to pay a claim, you’ve probably felt incredibly grateful for that policy. Professional liability insurance can help professionals feel the same way. Also known as errors and omissions insurance and malpractice insurance, professional liability insurance can help pay for legal defense, settlements, and judgments, even if a claim turns out to be unfounded. But how much does professional liability insurance cost?

Well, that depends. The cost of professional liability insurance can vary widely from one industry to another, depending on the amount of risk insurance companies believe your profession carries. In addition, factors such as your location, claims history, and the amount of coverage you choose (aka limits of liability) all impact how much you’ll pay in premiums.

In this article, we break down how much professional liability insurance typically costs, what factors most affect your premiums, and how pricing can differ by profession and business size. We also share practical tips you can use to help lower your rates without sacrificing the coverage you need.

Average Cost of Professional Liability Insurance

So let’s get down to it: how much does professional liability insurance cost? While it varies widely based on the type of services you provide, on average, errors and omissions insurance typically costs between $20 and $100 per month, or $240–$1,200 per year. The median cost is around $60 per month, or $720 per year.

These ranges apply to many small businesses and professionals, though your exact professional liability insurance cost may fall above or below this depending on your profession, your unique risk profile, location, the amount of coverage you choose, and more. In addition, if you are a medical or dental provider, you may pay more for professional liability insurance (i.e., malpractice insurance) than other professionals due to the high costs of medical malpractice claims.

Keep in mind that these numbers are estimates and based on Berxi policies. The true cost of your professional liability insurance depends on your business’s characteristics — and the best way to get an accurate idea of your premium is to compare quotes online.

What Factors Affect the Cost of Professional Liability Insurance?

When setting professional liability insurance costs, insurers evaluate a range of risk factors. Knowing what goes into pricing can help you estimate where your costs might land — and identify ways to shop for more affordable coverage.

Industry & profession

Your line of work plays a major role in determining the cost of professional liability insurance. Professions that involve significant financial decisions, specialized expertise, or regulatory oversight typically face higher costs.

For instance, real estate professionals and business management consultants often pay more for errors and omissions coverage than IT freelancers or marketing contractors since their mistakes can carry greater financial consequences. Likewise, medical and dental professionals may see higher premiums due to the costly nature of malpractice claims.

Business size & revenue

Revenue is commonly used by insurers as an indicator of risk. Generally, the more clients you serve or the higher your annual earnings, the greater your potential exposure — which can drive up your professional liability insurance cost. Businesses with larger staffs or multiple service offerings may also pay more because of added complexity and risk.

Coverage limits

Your policy’s limits of liability determine how much your insurer will pay toward a covered claim. Limits of liability are broken up into “per claim” and “aggregate” amounts, where aggregate means the total amount available to pay claims in an annual policy period. For example, you may have an errors and omissions policy with limits of $500,000 per claim and $1 million aggregate.

While higher limits offer broader protection, they also increase your premium. The right limits depend on your profession and risk profile. In industries like financial services or real estate, where claims and settlements are often substantial, higher limits are typically recommended.

Location

Where your business operates can have a significant impact on professional liability insurance pricing. State laws, local legal environments, and regional claims trends all influence premiums. For example, operating in an area with a higher frequency of professional liability lawsuits may result in higher insurance costs.

Claims history

Past claims matter. If your business has a history of professional liability claims, insurers may consider you a higher-risk policyholder, which can raise your premium for years after a claim occurs. Conversely, a clean claims record demonstrates good risk controls and may help you qualify for more favorable rates.

Type of policy

In malpractice insurance specifically, the type of policy you choose — either a claims-made policy or an occurrence policy — will impact your premiums. This does not apply to errors and omissions policies, which are almost always claims-made.

Occurrence policies cover malpractice claims that arise from services you performed while the policy is active, even if the claim is brought well after the policy period expires. They cost more than claims-made policies, but you don’t have to worry about finding additional coverage once the policy period ends.

Claims-made policies cover malpractice claims filed while the policy is active. They usually start with a lower premium than occurrence policies and then increase over time. If you cancel or switch insurers, you’ll need tail coverage to extend the reporting period for claims that aren’t filed until after the policy expires.

Professional Liability Insurance Cost by Profession

Now let’s look at some sample starting costs for different industries and professions. The following costs are for Berxi professional liability insurance policies.

Because premiums can vary so much by location, coverage limits, and claims history, all of the costs listed here are for full-time professionals working in California with no prior claims.

Errors & omissions insurance costs

The following sample costs are for Berxi errors and omissions insurance policies with limits of $250,000 per claim and $500,000 aggregate (i.e., the total amount available to pay claims in the annual policy period). Policies with lower limits, such as $100,000 per claim/$250,000 aggregate, would be less expensive; policies with higher limits, like $500,000 per claim/$1 million aggregate, would cost more.

Financial Professionals

Explore Financial Professional Liability Insurance

Consultants

Explore Business Consultant Liability Insurance

Media & Marketing Professionals

Explore Media & Marketing Professional Liability Insurance

Real Estate Professionals

Explore Real Estate Professional Liability Insurance

Insurance Professionals

Explore Insurance Professional Liability Insurance

Malpractice insurance costs

These quote estimates are for full-time medical and dental professionals in California who are looking for occurrence policies. Keep in mind that claims-made policies generally cost less.

Medical Professionals

The following sample costs are for Berxi’s occurrence-based medical malpractice insurance policies with limits of $500,000 per year/$1 million aggregate. Remember, if these seem expensive, a claims-made policy will be significantly less expensive.

Dental Professionals

These quote estimates are for private practice dental professionals with four or more years of experience who are looking for occurrence policies with limits of $1 million per claim/$3 million aggregate.

Mental Health Professionals

These quote estimates are for full-time mental health professionals in California who are looking for occurrence policies with limits of $500,000 per claim/$1 million per year.

How to Lower Your Professional Liability Insurance Cost

Reducing your professional liability insurance costs doesn’t have to mean sacrificing protection. With a few strategic decisions, you can keep your premiums budget-friendly while getting the comprehensive coverage your business needs.

Maintain continuous coverage

Letting your policy lapse — even for a short period — can increase your professional liability insurance cost. Continuous coverage signals reliability to insurers and may help you maintain better pricing.

Avoid claims

Risk management can help you avoid claims and lawsuits, which in turn leads to a lower cost of professional liability insurance. No business or professional can rule out the possibility of a lawsuit entirely, but by doing your due diligence, you can help minimize the risk of claims and keep your insurance costs down. Basic professional liability risk management strategies can include:

• Have a lawyer review your contracts.
• Document everything, including any project delays and conversations with clients.
• Develop standardized operation procedures, with manuals and checklists to ensure consistency.
• Communicate clearly with clients. Confirm instructions in writing and ensure clients understand the scope of the services you’re providing.
• Stay within your area of expertise.
• Train your staff well and continuously, including on any new developments in your field.
• Always report any potential claims to your professional liability insurance carrier immediately. This can improve your chances of a favorable outcome.

Compare quotes from different providers

To get the best coverage for your business at the best rate, compare quotes from a number of insurance providers. Some providers, such as Berxi, allow you to get an online quote in minutes.

Buy coverage directly from an insurance provider

Working directly with an insurer (rather than through a broker) can reduce fees and commissions that affect your total cost. Direct-to-consumer insurers like Berxi streamline their operations and pass those savings on to customers.

Adjust your deductible

If you have a higher deductible, you’ll pay less. At Berxi, this choice applies only to errors and omissions policies; Berxi has no deductibles for medical and dental malpractice policies.

Estimate Your Professional Liability Insurance Costs With Berxi

Because every business and professional is unique, the best way to determine your professional liability insurance cost is by getting a customized quote. With Berxi, it’s quick and easy — answer a few short questions to see an upfront price based on your profession, revenue, and coverage needs. No calls required. No uncertainty. Get an instant quote from Berxi.

Professional Liability Insurance Cost FAQ

What is the average cost of professional liability insurance?

For many small businesses and solo professionals, professional liability insurance typically costs a few hundred to a couple thousand dollars per year. The exact amount depends on your profession, revenue, coverage limits, claims history, and other factors.

Does professional liability insurance cost vary by state?

Yes, premiums can vary significantly by state due to differences in regulations, legal climates, and how frequently lawsuits occur. Businesses operating in states with higher litigation rates or stricter regulations often pay more.

How can I lower my professional liability insurance premium?

You may be able to reduce your premium by choosing appropriate coverage limits, maintaining a clean claims history, and implementing strong risk management practices. Comparing quotes from multiple insurers can also help you find a more competitive rate.

How much professional liability insurance do I need?

The right amount of coverage depends on your industry, the size of your business, and the potential cost of claims in your field. Many professionals choose limits that align with client requirements, contract terms, or typical settlement amounts in their industry.

 

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The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer