E&O Insurance Cost Calculator

What Professional Liability Insurance Covers

Professional liability insurance, commonly known as errors and omissions (E&O) insurance, protects professionals and businesses from claims arising from mistakes, negligence, or failure to deliver promised services. Unlike general liability insurance that covers bodily injury and property damage, E&O insurance specifically covers financial losses your clients suffer due to professional errors. This includes incorrect advice, missed deadlines, documentation errors, breach of fiduciary duty, and failure to perform contracted services. According to the Insurance Information Institute (III), the median professional liability claim costs between $30,000 and $150,000 in defense costs alone — even when the professional is found not at fault. E&O policies typically cover legal defense fees, court costs, settlements, and judgments up to the policy limit.

E&O Insurance Cost by Profession in 2026

Professional liability premiums vary significantly by occupation and risk profile. Consultants typically pay $500 to $1,500 annually for a $1M policy. Accountants and CPAs face premiums of $1,200 to $3,500 due to tax filing liability exposure. Attorneys pay $2,000 to $5,000 or more, with malpractice claims averaging $73,000 per incident according to NAIC data. Financial advisors typically pay $1,500 to $4,000 given fiduciary duty risks. Architects and engineers face the highest premiums at $2,500 to $6,000 because design errors can result in catastrophic building failures. IT professionals pay $800 to $2,000, while real estate agents typically pay $300 to $1,000. Medical professionals face specialized malpractice premiums ranging from $5,000 to $40,000 or more depending on specialty, state, and procedure volume.

Factors That Affect Your E&O Premium

Several factors determine your professional liability insurance cost. Annual revenue is a primary driver — insurers model potential claim exposure proportionally to business size. A firm earning $2M annually faces roughly double the exposure of a $500K firm. Employee count matters because each employee performing professional services increases the probability of an error occurring. Claims history is the most significant premium modifier: one prior claim adds 25-40% to your premium, while two or more claims can double it or result in coverage denial. Higher deductibles ($5,000-$10,000 vs the standard $2,500) reduce premiums by 10-20% and signal to insurers that you share risk. Coverage limits directly scale premiums — a $2M policy typically costs 50-70% more than $1M. Years in business provides a modest discount (5-10% after 5+ years) as experienced professionals demonstrate lower claim frequency.

Claims-Made vs Occurrence Policies

Professional liability insurance is predominantly written on a claims-made basis, unlike general liability which is typically occurrence-based. Under a claims-made policy, coverage applies only if both the incident and the claim occur during the active policy period. If you cancel a claims-made policy, you lose coverage for past work — even work performed years earlier. This is where tail coverage (also called an extended reporting period or ERP) becomes critical. Tail coverage extends the reporting period after a policy ends, typically for 1 to 5 years or sometimes indefinitely. Tail coverage usually costs 100-200% of the final annual premium as a one-time payment. When switching insurers, the new carrier may offer prior acts coverage (also called nose coverage) that covers previous work. Always confirm retroactive date alignment when changing E&O carriers to avoid a gap in protection for past professional services.