How much does Professional Liability insurance cost?

How much does professional liability insurance cost? The cost of professional liability insurance at ERGO NEXT can start as low as $19 per month for some low-risk professions.^† Roughly ¾ of our policyholders (73%) – including consultants, accountants, real estate agents, architects and engineers – pay $45 or less per month for coverage.¹ The fastest way to see the exact cost for professional liability insurance for your business is to get a free, no-obligation quote in about 10 minutes 100% online. If you like what you see, you can get covered immediately and share proof of insurance (a certificate of insurance, or COI) at no extra cost.

Jump ahead to learn:

• What’s the lowest cost of Professional Liability insurance?
• What’s the average cost of Professional Liability insurance by profession?
• How much is the median cost of Professional Liability insurance?
• What factors influence Professional Liability insurance cost?
• 5 tips that could help you save on the cost of Professional Liability insurance
• Get a free quote for Professional Liability insurance with ERGO NEXT

Professional Liability insurance coverage can be important protection for businesses who sell their knowledge, advice or professional services, including professions like real estate agents, consultants, financial services, architects and engineers. It can help cover legal fees and damages if you’re accused of a professional mistake or negligence that causes a client financial loss. What you’ll pay for your policy depends on a number of factors, such as the size of your business, your location and your years of experience.

What’s the lowest cost of Professional Liability insurance?

Seventy-three percent of ERGO NEXT customers spend $45 or less each month for professional liability insurance coverage.¹ And nearly half of our policyholders – 47% –spend $25 per month or less on this type of liability policy. Thirteen percent spend between $46 and $75 for coverage, and just 6% of our customers spend $76-100 monthly. Only one in 10 ERGO NEXT customers – 10% – spend over $100 dollars for the protections of professional liability.

How much will professional liability coverage cost for your business? Monthly premiums vary depending on the type of work you do and the potential impact of a professional mistake in your profession.

For example:

• Consultants may pay less for professional liability because their work is advisory, but they can still face claims if a recommendation leads to lost revenue or missed opportunities.
• Accountants may see higher costs for liability coverage since errors in tax filings or financial reporting can result in significant financial penalties for clients.
• Real estate agents can face claims tied to misrepresentation, missed disclosures or contract disputes during property transactions, meaning they’re potentially at higher risk for professional errors that cost a client money.

Architects and engineers may pay more for coverage due to higher financial stakes in their work, such as design errors or miscalculations that can lead to costly project delays, repairs or structural issues.

In general, the greater the financial impact of a potential mistake, the higher your premium may be. That’s why professions tied to large contracts, regulatory requirements or safety risks often carry higher insurance costs.

What’s the average cost of Professional Liability insurance by profession?

How much is the median cost of Professional Liability insurance?

The median cost for a professional liability policy is $25 at ERGO NEXT. The median represents the middle point — half of our customers pay less, and half pay more.

For many small business owners, this can be a more realistic estimate than a starting price. It gives you a better sense of what businesses like yours may actually pay for coverage.

What factors influence Professional Liability insurance cost?

The cost of liability coverage for your small business depends on several factors. Insurance companies calculate your professional liability insurance rates by considering some of the following risk factors:

1. How your type of business is classified

Insurance companies usually use the North American Industry Classification System (NAICS) to put your business into a specific risk category. These NAICS entities help set a baseline for professional liability insurance costs based on how often people in similar jobs face claims.

The greater the financial loss of potential professional mistakes, the higher the risk in your profession. And in insurance, higher risk usually means a higher cost for coverage.

For example, a yoga instructor carries a different NAICS classification code than a structural engineer. It’s more likely that a mistake in building design may have higher financial stakes than a mistake in a yoga flow. Therefore, an engineer may see higher insurance costs.

2. Client or contract requirements

Client contractual obligations may dictate your professional liability coverage cost. If a client requires proof of insurance (also called a certificate of insurance, or COI) that states a specific coverage limit, you may need to spend more to meet their requirements before you start a project.

3. The number of employees you have

For example: monthly costs for coverage for a freelance or sole proprietor IT consultant are likely going to be less than if you run a firm of 10 employees.

4. The location where you work 

Different states have rules and regulations around business insurance requirements. And in general, the more populous the area where you work, it’s more likely your insurance rates will be higher. A small business owner in a big city is more likely to pay more for insurance than a similar business in a small town. 

5. Your insurance claims history 

If you’ve had a covered claim in the past, insurers may see you as higher risk. Insurance companies could adjust your rate based on how likely they think it is that those events will happen again.

6. The limits and deductibles you choose

While higher coverage limits (the maximum amount an insurer will pay on a claim) on your professional liability insurance can offer more peace of mind, choosing more financial protection usually means an increase in your monthly or annual cost premium. 

On the flip side, choosing a higher deductible (your out-of-pocket costs after a covered event before the insurance policy kicks in) for your professional liability insurance policy could help lower your monthly rate. If you do choose a higher deductible, you can expect to cover more costs on your own if you have to file a claim.

7. Your years of experience in your profession

The number of years you’ve been in business in your industry can impact your insurance rate. Seasoned professionals often pay less than newcomers to an industry.

Note: These are only a few common factors that can affect your costs. Insurance providers often take into account many other factors, including external economic conditions and market trends. In addition, it’s important to provide accurate information about your business when you get a professional liability insurance quote. This can help ensure you get the right coverage and avoid delays if you need to process a claim.

5 tips that could help you save on the cost of Professional Liability insurance

You may be able to reduce your professional liability insurance premiums if you follow these best practices:

1. Bundle more than one policy

ERGO NEXT can help you save up to 10% if you bundle select policies. In addition to professional liability, many businesses could benefit from additional business insurance coverage to help cover more risk, including:

• General liability insurance. General liability coverage could help cover you if a non-employee gets hurt at your place of business (known as bodily injury) or your business causes damage to property you don’t own.
• Commercial property insurance. Property coverage could help protect your business assets like inventory, equipment, technology, flooring and furniture, as well as the physical space you lease or own for your business, such as HVAC systems, windows, walls and building structure. This type of insurance could also help replace your business income if you have to close for repairs after a covered event such as a fire, theft or storm damage.
• BOP insurance (Business Owner’s Policy). This coverage combines general liability with commercial property into a single policy — often at additional savings over buying two separate policies.
• Workers’ compensation insurance, a requirement in most states, could help cover medical costs for employees who suffer a work-related illness or injury.

2. Keep your risk level low

Reducing risks at your business could help limit the likelihood of an accident and help keep your costs in check. Take precautions such as:

• Keep detailed, recorded notes and receipts around your work.
• Only take on work that you’re experienced enough to accomplish well.
• Develop and execute training programs for your employees.
• Create process checklists and reviews for important standard operations.
• Stay up to date on industry news, innovations and current best practices.

3. Manage your client’s expectations

Clear communication can help prevent misunderstandings that lead to claims. When clients know what’s included — and what’s not — they’re less likely to dispute your work.

• Use written contracts with clear scope and timelines.
• Set expectations around outcomes and limitations.
• Document changes and approvals.

Clear contracts and agreed-upon deliverables can help reduce the likelihood of a professional negligence claim, which may help keep your costs more predictable.

4. Choose the right policy limits and deductibles

Although lower limits can help save money on your insurance, if you don’t have enough coverage you could be more vulnerable to financial loss.

If you want more protection from damages and incidents, higher coverage limits are an option. However, they could result in a higher premium or a higher deductible.

5. Learn from previous claims

Analyze your previous insurance claims and learn what you could have done to avoid those risks. Take steps to ensure you can prevent these missteps from repeating.

Get a free quote for Professional Liability insurance with ERGO NEXT

ERGO NEXT makes it fast, easy and affordable to protect your small business — and you can do it all online.

We’ll ask a few questions about your business and give you a quote. You can select your coverage options and buy your policy in about 10 minutes. Share your certificate of insurance at no extra cost, and you can access your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free quote with ERGO NEXT.