The median cost of professional liability insurance is $1,051 per year, according to Insureon, an online insurance marketplace.
Professional liability insurance coverage shields you from lawsuits that stem from mistakes, oversights and incorrect advice. It's essential for fee-for-service businesses, including accountants, architects and financial advisors.
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Cost of professional liability insurance by industry
Professional liability insurance costs can vary widely depending on what industry you're in. Risk levels vary from one profession to the next, as does the financial impact of a mistake. Insurers take all of that into account when determining rates.
Online insurance brokerage Coverdash shared these data about median costs with NerdWallet:
| Industry | Median professional liability insurance premium |
|---|---|
| Beauty and hair salons | $800 per year. |
| Personal fitness training | $900 per year. |
| Yoga and Pilates studios | $1,000 per year. |
| Marketing consulting | $1,500 per year. |
| Fitness centers and gyms | $1,800 per year. |
| Business and management consulting | $1,800 per year. |
| Safety consulting | $2,200 per year. |
| Financial management consulting | $2,800 per year. |
What else impacts the cost of professional liability insurance?
Coverage limits and deductibles
Coverage limits for professional liability coverage range from $250,000 into the millions. The higher your limits, the more expensive your premium. For deductibles, if you opt for a lower one, your premium will be higher.
When considering coverage limits, balance the annual cost of your policy with potential costs if you are sued by a client. You want enough coverage to pay any damages and defense costs.
For reference, a typical professional liability policy has a $1 million coverage limit (per occurrence and aggregate), meaning it will pay out up to $1 million for a single claim or over the life of the policy.
Location
Expect higher premiums if you work in a city with high claim rates or legal costs.
Number of employees
The more employees you have, the greater the odds that one of them will make a mistake resulting in a lawsuit. Your professional liability costs will reflect the increased risk. That's why gym owners generally pay more for insurance than individual personal trainers.
Years in business
Startups should expect higher professional liability premiums than more established companies. But as your business gains experience, your insurance costs should decrease — provided you don't file many claims.
Claims history
A track record of prior professional liability claims is a major red flag for insurers. When it comes to business insurance, red flags equal higher premiums.
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NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
How to save money on professional liability insurance
Some aspects of your professional liability costs, like industry and experience level, are out of your control. But there are other ways to lower the overall cost of your policy:
- Pay your premium upfront. Insurance companies often offer discounts if you pay your annual premium in a lump sum rather than monthly.
- Adjust your deductible, coverage limits. Opt for a higher deductible or smaller coverage limits to lower your overall costs. Just make sure your deductible is affordable and your policy is sufficient to cover against potential claims.
- Bundle your policies. Combine your professional liability policy with other business insurance coverage to save money across the board.
- Keep a clean record. Maintain a high standard for quality and attention to detail to avoid professional liability claims.
