How much does errors and omissions insurance cost?

On average, errors and omissions insurance costs $88 per month. Annual premiums range from under $400 to over $7,000.

Our figures are sourced from the median cost of policies purchased by TechInsurance customers from leading business insurance companies. The median provides a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

How much your premiums cost depends largely on your risk of professional negligence claims. Additional factors include your business revenue, location, and number of employees.

TechInsurance customers pay an average of $88 per month for errors and omissions coverage.

Annual E&O coverage costs for small business owners range from $400 to over $7,000. 43% of TechInsurance customers pay less than $75 per month for their E&O coverage, while another 28% pay between $75 and $150 monthly.

Your unique risks and the type and amount of coverage you choose can impact your policy rates.

Here are the top factors that impact your errors and omissions insurance costs:

• Policy limits
• Industry
• Cyber risks
• Deductible
• Location
• Claims history
• Number of employees
• Annual revenue

The cost you pay for errors and omissions insurance (also known as professional liability insurance or malpractice insurance) depends on your coverage limits. Most small business owners (56%) opt for an E&O policy with a $1 million per-occurrence limit and a $1 million aggregate limit.

11% of TechInsurance customers select the next most popular choice: a policy with $2 million/$2 million limits.

For some professionals, such as real estate agents, your state laws will determine the amount of coverage you need.

Businesses that offer professional services or advice that affects a client's income should consider higher policy limits as they’re more susceptible to client lawsuits. Higher limits cost more, but they cover more expensive claims.

E&O liability coverage helps protect against client lawsuits arising from the quality of work, such as missed deadlines, errors, or accusations of negligence. This includes legal costs, such as attorney fees.

If you need E&O coverage beyond the standard policy limits, you can carry excess liability insurance to increase these limits. Excess liability coverage starts once you’ve exhausted the limits of your primary E&O policy.

This policy provides an additional layer of protection for higher-risk businesses; however, the higher your total coverage limit, the more risk your insurance provider is taking on, which increases your rates.

Consult a TechInsurance agent if you have questions about the right coverage for your needs.

E&O insurance by itself won't protect you if a client sues over a cyberattack that results in a data breach. However, it's often bundled with cyber liability insurance in a package called technology errors and omissions insurance, also referred to as tech professional liability insurance.

Tech E&O coverage costs depend on the amount of data and the number of employees who can access it. The more people in your company who have access to sensitive data, the greater the chance of a data breach.

For example, large cybersecurity companies and businesses with sensitive digital assets would pay more for their tech E&O policy than a smaller technology company with fewer employees.

Policies with high deductibles cost less, but you’ll have to pay that amount before you can collect on a claim. Most TechInsurance customers choose a $2,500 deductible for errors and omissions insurance.

Your E&O coverage costs can be impacted by your business location. Insurance providers factor in location when determining your risks and establishing premium rates. Some areas may have state-specific policy requirements or greater legal costs.

California and New York businesses, for example, may face higher premiums than those in other regions due to the business environment, including legal and historical claim trends.

If your business has locations in several states or serves clients in multiple jurisdictions, your policy price and structure may also be impacted.

The following table shows how the cost of E&O insurance varies across states:

Insurance companies evaluate your claims history to establish how risky your business is to insure. Companies with a history of errors and omissions claims will pay more than those without.

Risk management is critical to keeping your insurance costs down. Small businesses without a history of claims often benefit from lower rates and other discounts.

Minimize risks at your workplace through strict protocols, employee training, safe business practices, and documented communications with clients. These risk management strategies can help keep your overall insurance costs lower.

The more employees you have, the more opportunities there are for a client to file a lawsuit. Larger workforces can increase the likelihood of miscommunications, mistakes, and incidents that lead to E&O claims.

While errors and omissions insurance is recommended for many small businesses, most state laws require small business owners to carry workers' compensation if they have employees, and commercial auto insurance if they have business-owned vehicles.

If you are a freelancer, independent contractor, or sole proprietor, it's still a good idea to carry E&O coverage to protect yourself from the high costs of legal defense.

Higher annual business income often leads to higher errors and omissions liability premiums for most small businesses.

The bigger the size of your business and the more contracts and clients you take on, the more likely you or your employees are to make an error or commit an accident, which could lead to a lawsuit and a subsequent insurance claim.

Smaller companies with lower revenue often have lower E&O insurance costs.

Growing your business and taking on more jobs, contracts, and employees can increase professional liability insurance rates.

Errors and omissions insurance is a crucial coverage option for businesses that provide expert advice or specialized services.

Seasoned professionals can still make errors, oversights, or gaffes and may provide guidance that causes financial loss for their clients. If the client sues, legal expenses and settlements can escalate to the point where they could sink your business.

Even if you or your employees have done nothing wrong, you could still face a costly lawsuit. For example, your business could fall behind on a projected deadline due to no fault of your own or your team, or a client could sue over scope creep that was out of your hands.

Lawsuits are exceptionally expensive, even frivolous ones. If you lose the lawsuit, you could end up paying a significant amount in a court-ordered judgment or a settlement.

Errors and omissions insurance covers legal expenses related to lawsuits, and because the premium is based upon your level of risk and your industry, many small businesses pay a fairly low amount for this type of insurance.

A good risk management strategy to reduce E&O claims includes:

• Detailed contracts with clients
• Clear client communication
• Prompt resolution of complaints
• Checking (and double-checking!) your work for errors
• Strong cybersecurity measures to reduce cyber risks

You can’t eliminate risk. If that were possible, insurance companies would be out of business. But risk management helps you sidestep common pitfalls that lead to liability claims and higher errors and omissions (or professional liability) insurance costs.

TechInsurance is a trusted insurance expert for small businesses, including contractors and consultants. We help business owners compare quotes from top-rated providers, buy policies, and manage coverage online.

By completing TechInsurance's easy online application today, you can compare free quotes for errors and omissions insurance and other policies from top-rated U.S. carriers. TechInsurance insurance agents are available to help answer any questions you may have.

Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

Insurance premiums vary based on the policies a business buys. View our small business insurance cost overview or find out the average costs for other common types of business insurance.