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How Much Does E&O Insurance Cost for Tech Businesses?
Errors & Omissions Policies Start at $72 / Month
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What Is the Cost of Errors and Omissions Insurance for a Small Business?

Errors and Omissions Insurance (also known as Professional Liability Insurance) costs range from a median of $860 to $1,939 and an average of $956 to $2,652 per year. E&O Insurance prices vary depending on the size of your business and what you do. For example, an independent contractor is on the low end of that range and may pay as little as $860 a year for coverage (only about $72 each month). Larger IT consulting firms might pay closer to $1,939 a year for a policy.

In the sample quotes below, you'll see a breakdown of policy costs for three business sizes:

  • Independent contractors.
  • Small consulting companies.
  • Large consulting firms.

We include both median and average costs in these sample quotes to give you a better picture of what IT businesses actually pay for coverage. As you know, an expensive outlier may drive the average cost up, so median costs tend to give a more accurate representation of what most businesses pay.

For a comprehensive look at the cost of Professional Liability / Errors & Omissions Insurance across all industries, visit Insureon.

What Does Errors & Omissions Insurance Cover?

E&O Insurance protects small businesses when they're sued over financial losses caused by their advice or services. Technology firms in particular often need E&O Insurance for two reasons:

  1. Clients often misunderstand the details of a proposed project.
  2. Laws often lag behind technological developments – meaning that disputes frequently need to be settled in court.

When you're accused of providing incomplete or negligent services, E&O Insurance can pay for your legal fees, including lawyer bills, settlements, or judgments.

Worth noting: Most E&O policies operate on a "claims made" basis. This means that your policy must be in force when an incident takes place and when a lawsuit is initiated against you. If these two conditions aren't met, you may not be able to collect benefits.

Now that you know why E and O Insurance is so valuable for IT businesses, let's look at sample quotes that give you a ballpark idea of what your coverage may cost.

Sample Errors & Omissions Insurance Quote: Independent Contractor / Web Designer

For the purposes of these sample E&O Insurance quotes, we consider an independent contractor or web designer to be someone with no employees who brings in between $0 and $150,000 in annual revenue.

Based on those specifications, here's what a contractor might pay for their coverage:

  • Average Errors and Omissions Insurance cost: $956 / year.
  • Median Errors and Omissions Insurance cost: $860 / year.

These estimates are based on a sample policy with a coverage limit of:

  • $1 million per occurrence.
  • $1 million annual aggregate.

This sample quote doesn't include unauthorized access or malicious code coverage or intellectual property liability coverage. You may need malicious code coverage if you offer security services such as firewall and antivirus application services. Including this protection in your policy might increase your premium by about five percent.

Sample Errors and Omissions Insurance Quote: Small IT Consulting Company

For these sample quotes, we define a "small" consulting company as one that…

  • Employs 2 – 5 employees.
  • Brings in $250,000 – $1 million in annual revenue.

Assuming the above, here's what a typical small IT consulting firm can expect to pay:

  • Average Errors and Omissions Insurance cost: $1,264 / year.
  • Median Errors and Omissions Insurance cost: $961 / year.

These estimates are based on a policy with a…

  • $5,000 deductible.
  • $1 million per occurrence coverage limit.
  • $1 million annual aggregate coverage limit.

The policy used to generate this sample quote does include unauthorized access coverage and malicious code coverage. However, it doesn't include coverage for intellectual property incidents.

Sample Errors and Omissions Insurance Quote: Large IT Consulting Company

For these sample quotes, we define a "large" consulting company as one that…

  • Employs 6 or more employees.
  • Earns $3 million – $10 million in annual revenue.

Other factors also impact the amount of money a large consulting firm can expect to pay for Errors & Omissions Insurance. But based on the specs above, here's what a large firm may pay:

  • Average Errors and Omissions Insurance cost: $2,652 / year.
  • Median Errors and Omissions Insurance cost: $1,939 / year.

These estimates are based on a policy with a…

  • $5,000 deductible.
  • $1 million per occurrence coverage limit.
  • $1 million annual aggregate coverage limit.

The policy used to generate this sample quote does include coverage for unauthorized access coverage and malicious code coverage, but doesn't include coverage for intellectual property liability.

This policy also includes a minimum earned premium of 30 percent. That means a business must pay at least 30 percent of the annual premium even if it decides to cancel the policy shortly after putting it in force.

Find Out How Much Your Errors & Omissions Insurance Costs

Ready to see what you'll pay for Errors & Omissions coverage? Fill out an online application (the process should take about 15 minutes) to get free quotes sent right to your email. Your agent will be ready to answer your questions and help you choose a policy that makes sense for your budget and coverage needs.