What is the average cost of professional liability insurance?

The average cost of professional liability insurance for a small business is $1,200 to $2,500 per year. A solo consultant with low revenue might pay $500 to $800 annually, while a mid-size law firm or financial advisory practice could pay $5,000 to $15,000 or more.

What does professional liability insurance cover?

Professional liability insurance covers claims that your professional services caused a client financial harm, including allegations of negligence, mistakes in your work, failure to deliver promised services, and breach of professional duty. It pays for legal defence costs even if the claim is groundless.

Who needs professional liability insurance?

Any professional who gives advice, provides a service, or creates work product for clients needs professional liability insurance. This includes consultants, accountants, lawyers, architects, engineers, real estate agents, IT professionals, financial advisors, therapists, and healthcare providers.

What is claims-made vs occurrence coverage?

Most professional liability policies are written on a claims-made basis, meaning the policy must be active both when the incident occurred and when the claim is filed. If you retire or switch insurers, you may need tail coverage to cover claims filed after your policy ends for work done while it was active.

How much professional liability coverage do I need?

Most small professional service businesses start with $1 million per claim and $1 million aggregate. Lawyers, accountants, and financial advisors typically carry $1-2 million per claim. Healthcare professionals and architects often need $2-5 million or more. Check minimum coverage requirements in your client contracts.

Can I deduct professional liability insurance as a business expense?

Yes. Professional liability insurance premiums are generally fully deductible as an ordinary and necessary business expense under IRS rules. This applies whether you are a sole proprietor, partnership, S-corporation, or C-corporation. Consult your accountant regarding your specific situation.

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How Much Does Professional Liability Insurance Cost?

Updated 26 March 2026

Professional liability (E&O) insurance typically costs $500 to $3,000 per year for most small businesses. Use our free estimator to get a personalised estimate based on your profession, revenue, and experience.

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Professional Liability (E&O) Cost Estimator

Get an instant premium estimate based on your profession, revenue, and claims history

Profession

Annual Revenue from Professional Services

Higher revenue means higher potential liability exposure

Years of Professional Experience

yrs

More experience typically lowers your premium

Prior Claims History

Prior claims are the single biggest premium driver

Estimated Annual Premium

$650 – $2,000

per year

Monthly Cost

$54 – $167

If billing monthly

Typical Deductible

$1,000 – $5,000

Higher deductible = lower premium

Note: These estimates are based on industry averages for a $1M / $1M policy. Your actual premium depends on your specific practice area, location, client types, and insurer. Get quotes from at least three licensed insurers before purchasing.

Typical Policy Structure

Per-claim limit$1M

Aggregate limit$1M or $2M

Policy typeClaims-made

Professional Liability Costs by Profession

Profession	Typical Annual Premium	Risk Level
Consultant / Freelancer	$500 - $1,500	Low
IT Consultant / Developer	$600 - $1,800	Low-Medium
Marketing Agency	$600 - $1,800	Low-Medium
HR Consultant	$550 - $1,600	Low-Medium
Real Estate Agent	$700 - $2,000	Medium
Accountant / CPA	$800 - $2,500	Medium
Therapist / Counsellor	$700 - $2,200	Medium
Financial Advisor	$1,200 - $4,000	High
Architect / Engineer	$1,200 - $4,500	High
Lawyer / Attorney	$1,500 - $6,000	High
Healthcare Professional	$1,000 - $5,000+	Very High

Ranges based on $1M / $1M policy for a solo practitioner with under $500K revenue and no prior claims. Premiums increase significantly with revenue and claims history.

How Much Does Professional Liability Insurance Cost?

Professional Liability (E&O) Cost Estimator

Professional Liability Costs by Profession

Frequently Asked Questions