How Much Is Professional Liability Insurance? Cost Breakdown Explained

To err is human. In business, however, a single error can have serious financial consequences and severe reputational damage for any organization, regardless of its size. Professional liability insurance helps provide financial protection against claims of professional negligence, errors, and omissions. It covers legal costs, settlement fees, and judgments, in case a client sues your business for causing financial loss.

Since it’s an essential coverage, many businesses need to understand professional liability insurance costs and the factors affecting them. In this article, we’ll break down how insurance companies calculate professional liability insurance premiums, what influences your rates, and how to get lower premiums in Ontario.

How Much Is Professional Liability Insurance in Ontario?

The cost of professional liability insurance coverage starts at $400 annually for small businesses and sole professionals. Meanwhile, large businesses can see premiums between $2000 and $5000 per year. Below are some examples of how the size of your firm and risk factors affect your professional liability insurance cost:

Sole Professionals: Errors and omissions insurance costs for sole professionals are usually around $400 to $1,200 per year. This applies to consultants, freelance designers, independent IT specialists, real estate agents, and other sole advisors.
Small Businesses: Small business insurance provides professional liability coverage for companies with small teams with low risk exposure. In Ontario, small business owners pay an average monthly E&O insurance cost of $70 to $200, which translates to roughly $800 to $2,500 per year.
Mid-Sized Firms and Large Companies: The average annual cost of professional liability insurance ranges from $2,000 to $5,000 per year. Businesses with big teams, high revenues, and more complex projects face higher premiums, especially those handling sensitive client data or high-value contracts.

Professional Liability Insurance Cost by Profession

Many businesses in Ontario need professional liability insurance to protect themselves against professional liability claims, meet client obligations, or comply with regulatory requirements. Below are professional liability insurance rates for some of the common professions in Ontario:

Consultants

A comprehensive professional liability insurance policy for consultants would usually cost between $500 and $2,000 per year. Even if you’re working independently, you still need this coverage to provide financial protection if a client sues you for causing financial loss with your advice or service.

IT & Tech Professionals

Businesses and professionals in the tech industry, such as IT consultants, software developers, and technology service providers, usually pay between $800 and $3,000 annually. This price estimate isn’t 100% confirmed for all businesses. Costs can increase for businesses handling sensitive data, cybersecurity services, or large-scale system integrations, where the stakes are higher, and the margin for error is slim.

Accountants & CPAs

Accountants, financial advisors, and CPAs handle sensitive financial information and provide advice that can have a direct impact on the client’s finances. With so much at stake, a professional liability policy costs between $1,000 and $4,000 per year and can even increase for firms offering auditing or complex financial advisory services. This coverage is actually mandatory for accountants to comply with CPA Ontario requirements.

Real Estate Professionals

Real estate professionals need professional liability insurance in Canada because they provide consultancy services related to property transactions and closing prices. A single claim alleging financial loss due to misrepresentation, unintentional mistakes, or inaccurate advice can lead to costly legal fees and reputational damage. For as little as $400 to $1,500 per year, real estate professionals can protect themselves against client claims of negligent acts, errors, or omissions.

Healthcare Professionals

Malpractice insurance is another name for professional liability insurance in the healthcare sector. It’s required by several governing colleges, including CNO, OCP, and CPSO, to protect professionals against claims alleging negligence, errors, or omissions in patients’ care or treatment. This coverage usually costs between $600 and $3,500 annually, depending on several factors such as claims history, coverage limits, and professional experience.

Marketing & Creative Professionals

Marketing and creative professionals provide strategic advice and media services that can influence a client’s review and public image. Since the creative field is a very competitive one, claims of copyright infringement, misrepresentation, or failure to deliver agreed-upon results can arise. Professional liability insurance covers legal defence costs, settlements, and judgments related to these claims only for a price ranging between $500 and $2,000 per year.

Lawyers and Legal Firms

Lawyers and legal firms provide professional services that involve legal advice, client representation, and the preparation of documents. A minor oversight or mistake can cost your client thousands of dollars and lead to legal claims. That’s why professional liability insurance is required for lawyers to protect them against claims of negligent acts and errors. This coverage for lawyers and legal firms costs anywhere between $2,000 and $10,000 per year, depending on firm size, number of employees, risk factors, and claims history.

How to Lower Professional Liability Insurance Cost in Ontario

Choose the Right Coverage Limits

Many experienced professionals opt for higher coverage limits in their professional liability insurance to ensure maximum protection. However, selecting limits that exceed your risk exposure can unnecessarily increase premiums. That’s why working with a seasoned insurance broker like St. Andrews is essential to help you get the best deals and ensure you aren’t paying for unnecessary coverage. Contact us today to get the best professional liability insurance plan for your Ontario business.

Bundle Your Insurance Policies

Combining multiple insurance policies under one bundle with the same insurance provider can help you lower your overall insurance rates. It can also simplify policy management, reduce administrative costs, and allow you to manage all your coverages in one place. For example, you can bundle your professional liability insurance with commercial general liability insurance or auto insurance to benefit from discounted insurance premiums.

Improve Risk Management

Many insurance providers offer discounts for businesses that demonstrate strong risk management practices. Implementing risk management strategies can reduce errors, potentially lower your premium rate, and enhance your credibility with clients.

Compare Quotes from Multiple Providers

Never settle for the first quote you receive. We know you’re busy managing your business operations, but skipping the comparison of insurance quotes from multiple insurers can cost your business a lot. That’s where St. Andrews can help. We have access to a wide network of top-rated insurance providers in Ontario, which allows us to compare quotes on your behalf to get you the best deal.

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Pay Your Premiums Annually

Consider paying annual premiums instead of monthly payments. This approach saves money by avoiding installment fees and administrative charges that are often added to monthly payment plans. It can also make budgeting easier because it’ll be a single payment you pay every your, not a monthly thing that you need to keep track of.

Is Professional Liability Insurance Worth the Cost?

Professional liability insurance is totally worth the cost because if a single client files a lawsuit alleging negligence, the financial and reputational damage will be severe. You’ll lose clients’ trust, and you’ll have to pay tens of thousands of dollars in lawyer fees, legal expenses, even before settlements or judgments are considered. Professional liability insurance costs a fraction of these potential expenses, and it enhances your credibility because many clients won’t work with you unless you have PLI.

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What Are the Factors Affecting Professional Liability Insurance Cost?

Risk Factors: Higher-risk industries usually face higher premiums due to the increased likelihood of insurance claims.
Business Size: The larger your business is, the higher your premiums will be. For example, the average annual professional liability insurance cost for a small business is between $500 and $1500. Meanwhile, medium to large businesses pay anywhere between $2000 and $5000.
Claims History: Businesses with a history of frequent severe claims are considered high risk, and they usually get higher insurance premiums. On the other hand, businesses with fewer or no claims get discounted rates.
Coverage Limits: The coverage limits you choose directly impact your insurance rates. For example, if you opt for higher coverage limits, you’ll get better protection, but you’ll have to pay more. Meanwhile, choosing lower limits can reduce your insurance premiums, but you might not get sufficient coverage. Partnering with St. Andrews can help you get the right coverage at the best rate.
Deductibles: A deductible is the amount of money you’ll have to pay out of pocket when filing a claim. The higher your deductible is, the lower your insurance premiums will be. You have to find the right balance where you can afford to pay the deductible when needed while keeping your insurance premiums manageable.

Is Professional Liability Insurance Required by Law in Ontario?

Professional liability insurance isn’t legally required for all professions in Ontario, but it’s mandated by certain regulated professions, such as lawyers, healthcare professionals, accountants, engineers, and many others. Governing bodies require their members to carry professional liability insurance, also known as errors and omissions insurance and professional indemnity insurance, to protect clients and maintain professional standards.

Even if this coverage isn’t required by your governing college, all businesses that provide professional advice or deliver services should carry professional liability insurance. A comprehensive professional liability policy covers your business against claims of negligence, errors, or omissions by helping cover legal costs, settlements, and judgments associated with these claims.

How Much Is Professional Liability Insurance for Small Businesses?

A basic professional liability insurance policy with a limit of $100,000 costs approximately $250 annually. However, this coverage isn’t enough because a single claim can easily exceed this amount, especially if it involves settlements and judgments. Across the insurance industry, most advisors recommend higher coverage limits for small businesses. In Ontario, professional liability insurance with more practical limits of $1 million generally costs between $500 and $1,500 per year for small businesses.

How to Get an Accurate Professional Liability Insurance Quote in Ontario

Assess your business needs, risk factors, and the type of professional service you provide.
Click “Get a Quote” and fill out the quote form or contact us directly.
Once you submit the form, an insurance advisor will contact you to review your information and explain everything you need to know.
We’ll compare quotes on your behalf and send you the best ones to choose from.

Our quoting process is straightforward and transparent, ensuring you receive accurate pricing, clear coverage options, and professional guidance so you can make an informed decision without unnecessary complexity.

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What Are the Coverage Limits for Professional Liability Insurance?

$250,000: This is usually the go-to for sole professionals who are just starting out or low-risk service providers who tend to work with a smaller client base and smaller contracts.
$500,000: This price point is generally best suited for smaller businesses that give pro advice but have a moderate level of risk exposure and don’t have tons of contractual hoops to jump through.
$1 million: This is actually the most popular choice for small to mid-sized businesses here in Ontario, and you’d be surprised how often it’s a requirement in client contracts.
$2 million: More and more growing firms, regulated professions and businesses that handle higher value projects and more complex services are gravitating towards this one.
$5 million or more: You’ll usually see large firms, high-risk professions and businesses operating under a lot of contractual or regulatory pressure opt for this higher-end policy.

How Much Is Professional Liability Insurance – FAQs

How much does professional liability insurance cost each month?

Professional liability insurance usually costs anywhere from $40 to $200 a month, but that price range can vary a lot depending on your industry, how much coverage you need, the size of your business, and how big the potential risk is.

Is professional liability insurance tax-deductible?

The good news is yes. Professional liability insurance premiums are usually considered a business expense, and you can write them off on taxes. Just to be safe, though, you should probably check with a tax pro to confirm you’re eligible.

Do small businesses really need professional liability insurance?

The simple answer is yes. Any small business that provides advice or services to people can end up facing claims of negligence or making mistakes, making professional liability insurance a vital form of protection.

Is errors and omissions insurance the same as professional liability insurance?

You can also see it called that – errors and omissions insurance is just another name for professional liability insurance and covers the same type of risk.

Does professional liability insurance cover bodily injury and property damage claims?

No, it doesn’t. If you’ve got business that involves providing services, professional liability insurance will cover financial losses if things go wrong. If you’re worried about people getting hurt or property damage, you’ll want to look at commercial general liability insurance instead.

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