How much does professional liability insurance cost?

Regardless of insurance policy limits, the median cost of professional liability insurance for a small business is $59 per month ($708 annually). The median cost offers a more accurate estimate of what your business is likely to pay than the average cost of business insurance because it excludes outlier high and low premiums.

About half of small business owners (51%) pay between $500 and $1,000 per year for their policies, and almost one in five (18%) pay less than $500. These figures were derived from an analysis of thousands of insurance policies purchased by TechInsurance's small business customers.

Your type of business and the industry you work in have a significant impact on the cost of professional liability insurance, since different professionals are exposed to different liabilities. On average, higher risk industries pay higher premiums, while low-risk industries enjoy lower rates.

For example, a project manager whose project is expected to increase company revenue will likely pay a higher premium for their professional liability insurance policy. So might a cybersecurity professional responsible for another company’s data security.

The cost of professional liability insurance also depends on the specifics of the policy. For example, a professional liability policy that includes cyber liability insurance will cost more since it includes coverage for data breaches.

If you want a professional liability insurance policy that pays out more per incident or per year, you’ll need to increase your amount of coverage – which means you’ll pay a higher premium to your insurance company.

The limits on professional liability policies vary significantly, from $250,000 to $2 million. Most TechInsurance customers (61%) purchase a $1 million / $1 million professional liability policy. This includes:

• $1 million per-occurrence limit. While the policy is active, the insurer will pay up to $1 million to cover any single claim.
• $1 million aggregate limit. During the policy period (usually one year), the insurer will pay up to $1 million to cover all claims.

There are several things you can do to keep your professional liability insurance costs low. Let's take a look at some strategies.

You can choose to pay your insurance premiums once a month or once a year. While making a smaller payment each month requires less money up front, it may cost more in the long run since insurers often offer discounts to businesses that pay an annual premium.

While it’s possible to purchase professional liability coverage when you start a project and drop coverage when you complete the project, this cost-cutting strategy can backfire. To collect insurance benefits, your “claims-made” professional liability policy must be active:

• When an alleged mistake occurs
• When the claim is filed

Continuous coverage is key if you don't want to pay out of pocket for professional liability lawsuits.

Small businesses with no previous claims on their insurance can expect to pay less for business insurance. You can avoid claims with a risk management plan for professional liability exposure and cybersecurity threats. That could include:

• Open communication with clients to avoid conflict
• Client approval of every step of a project
• A formal procedure for resolving complaints
• Strict protocols for handling customer data
• Use of firewalls and other security technology
• Educating clients on how to prevent data breaches

Insurance premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific policy.

• General liability insurance
• Workers' compensation insurance
• Business owner's policy
• Cyber liability insurance
• Commercial umbrella insurance
• Commercial auto insurance
• Employment practices liability insurance
• Directors and officers insurance
• Fidelity bonds
• Commercial property insurance
• Business interruption insurance
• Hired and non-owned auto insurance