How Much Does Professional Liability Insurance Cost?

Professional liability insurance — also known as Errors & Omissions (E&O) insurance — costs between $500 and $5,000 per year for most professionals and small firms. The average cost for a $1 million policy is roughly $1,000 to $3,000 annually, though some high-risk professions pay significantly more.

Professional liability protects you when a client claims your advice, services, or work product caused them financial harm. It covers legal defense costs and settlements, which can easily reach six figures even for unfounded claims. Understanding the cost factors helps you budget and find the best value.

Professional Liability Cost by Profession

Your profession is the biggest factor in E&O pricing. Professions where bad advice can cause significant financial harm pay more.

Profession	Average Annual Cost ($1M/$2M)	Risk Level	Key Risk Factors
IT Consultant	$1,000 – $3,000	Medium-High	System failures, data loss, project delays
Management Consultant	$800 – $2,500	Medium	Bad strategic advice, missed deadlines
Accountant / CPA	$1,000 – $3,500	Medium-High	Tax errors, audit failures, misstatements
Insurance Agent / Broker	$1,500 – $5,000	High	Coverage gaps, placement errors
Real Estate Agent	$500 – $1,500	Medium	Disclosure failures, transaction errors
Financial Advisor	$1,500 – $5,000	High	Investment losses, suitability claims
Architect / Engineer	$2,000 – $8,000	High	Design errors, structural failures
Marketing / PR Agency	$600 – $2,000	Low-Medium	Campaign performance, IP issues
Graphic / Web Designer	$400 – $1,200	Low	Missed deadlines, IP infringement
HR Consultant	$700 – $2,000	Medium	Compliance advice, wrongful termination
Lawyer (malpractice)	$2,500 – $15,000+	Very High	Missed deadlines, conflicts, bad advice
Healthcare (malpractice)	$3,000 – $30,000+	Very High	Patient injury, misdiagnosis

Professional Liability Cost by Revenue

As your revenue grows, so does your E&O exposure — higher revenue typically means larger client engagements and bigger potential claims.

Annual Revenue	Average E&O Cost (Annual)	Typical Limits
Under $50K	$400 – $800	$250K – $500K
$50K – $100K	$500 – $1,200	$500K – $1M
$100K – $250K	$800 – $2,000	$1M
$250K – $500K	$1,200 – $3,000	$1M
$500K – $1M	$2,000 – $5,000	$1M – $2M
$1M – $5M	$3,500 – $10,000	$2M – $5M
$5M+	$8,000 – $25,000+	$5M+

What Affects Your Professional Liability Premium?

Carriers evaluate multiple factors when pricing E&O coverage:

Profession / industry — The type of advice or service you provide determines your base risk profile
Revenue — Higher revenue means larger engagements and more exposure
Years in business — Newer businesses may pay more due to lack of track record
Claims history — Prior E&O claims significantly increase premiums
Coverage limits — $2M costs roughly 40–60% more than $1M
Deductible — Higher deductibles ($2,500–$10,000) reduce premiums
Contract values — Working on large contracts increases your risk exposure
Client type — Serving enterprise or government clients often requires higher limits

Claims-Made vs. Occurrence Policies

Professional liability policies are almost always written on a "claims-made" basis, which is important to understand for cost planning:

Policy Type	How It Works	Cost Implications
Claims-Made	Covers claims made during the policy period	Premiums start lower, increase annually for 5–7 years until reaching "mature" rate
Occurrence	Covers incidents that occurred during the policy period	Higher initial premiums, no tail coverage needed

With claims-made policies, you may need "tail coverage" (an extended reporting period) when you cancel or switch carriers. Tail coverage typically costs 150–200% of your final annual premium as a one-time charge.

How to Reduce Professional Liability Costs

Maintain detailed contracts — Clear scope-of-work agreements and limitation of liability clauses reduce your risk profile
Document everything — Thorough records of advice given, decisions made, and client approvals protect against claims
Get client sign-offs — Written approvals at key milestones create a paper trail
Choose higher deductibles — Increasing your deductible from $1,000 to $5,000 can save 10–15%
Compare carriers — E&O pricing varies significantly; specialty carriers often offer better rates for specific professions
Bundle policies — Packaging E&O with GL or a BOP may qualify for multi-policy discounts

Why Compare E&O Quotes?

Professional liability is a specialty market where pricing varies dramatically between carriers. A carrier that specializes in IT consulting E&O might offer rates 30–50% lower than a generalist carrier for the same coverage. Conversely, that same carrier might be expensive for accounting E&O.

Insura connects you with 20+ carriers including Hiscox, Hartford, CNA, Chubb, and profession-specific E&O specialists. Compare quotes side by side and find the best coverage at the best price.

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