Author: Kimberlee | October 7, 2024
Edited by: Kimberlee and Reviewed: Kimberlee
Getting a professional liability policy is important for many businesses to protect themselves against claims that they did something unprofessional in their work that resulted in a loss. The professional liability insurance cost is determined by many factors that will either raise or drop the premium price. This article takes a deep dive into those factors.
Your small business can get a professional liability insurance policy for as little as $22.50 per month. Of course, this amount can go up depending on your company’s profile specifics. Many small businesses will pay anywhere from $350 to $1,800 per year for a policy. Here’s what you need to know about factors that affect cost.
A small business providing services will need a professional liability insurance policy. Here are the factors that affect the price.
What you do and the type of services that you provide will impact the cost of your professional liability insurance policy. Some industries are more likely to experience a claim than others. For example, an accountant is more likely to have a claim filed against him than a tutor. The more likely a small business is to have a claim, the higher the cost of insurance.
The number of employees will affect the price because the more employees you have, the more there is a chance that someone will make a professional mistake leading to a claim. This likelihood of a claim will increase the cost of insurance.
Revenues are another factor affecting the cost of professional liability insurance. The higher the revenue, the more business you are conducting. By the law of averages, the more business you do, the more likely you are to have a claim. This will increase the cost of your professional liability insurance premium.
Having a clean claims history will help keep the cost of professional liability insurance premiums down. A company with a history of claims is more likely to have another claim. At least, this is the experience of the insurance companies, which is why they charge a higher premium if you have had one or more claims in the past.
How much coverage and the amount you choose as a deductible will affect your premium rates. Higher coverage will be more costly, while choosing a higher deductible will lower the premiums. Most policies allow you to select a deductible ranging from $1,000 to $25,000. The deductible is your portion of the claim; thus, the more responsibility you assume, the lower your premium will be.
Where you are at can affect the price of your policy. Some cities are simply more litigious than others. Local regulations will also affect the rate as there may be some laws that affect the need for coverage and the amount of coverage you get.
If you shop your policy around, you’ll find that different companies have different rates. This is because one company’s appetite for the industry and policy might be higher than another’s, resulting in lower costs. Get a quote now to see where you can get the best rates.
When you first start a policy, you will pay the initial premium. This is good for the first year of the policy. Approximately four to six weeks prior to renewal, you will get the renewal premium with any adjustments that are implemented. Read through the policy breakdown to see if there are any additional fees or surcharges added to the policy.
Here’s what you can do to help reduce the cost of small business professional liability insurance.
Set in place risk management practices. One of the first places to do this is to create a thorough contract that outlines the services you offer for your fees. Insurance companies will want to see your contracts to know what is stated in the terms. A good contract sets client expectations and can be an out for a claim if the contract states explicitly that something is excluded.
Shop your policy around with different carriers. This will help you find the carrier that has the biggest appetite for your professional services. This will help you compare policies with the same coverage and see where you find the best price.
Taking more ownership in a claim will help you keep professional liability insurance costs down. Remember that you can choose a deductible as high as $25,000. Be sure you choose a deductible that you can fund since this will be your portion of the claim.
Some insurance companies will offer discounts if you bundle multiple business insurance policies with them. While shopping around, ask about bundling to see what types of discounts are available. Not every insurance carrier does this, so it may take a bit of work to find bundling discounts.
Professional organizations often have discounted professional liability insurance available to members. This can be a great way to get a policy at a lower price.
Your professional liability insurance policy will renew each year. The renewal price is the price you will pay for the next 12 months. Your policy will not change, even with a claim, during the policy period.
Under certain circumstances, you can negotiate the price of a professional liability policy. Talk to your insurance broker about your circumstances and see what you can do to lower your premium costs.
If having professional liability insurance is required for state licensing, you may have your license suspended if you don’t have a current policy. Check with your state board to see what other penalties may exist.
Shopping around is a great way to get the best price for your professional liability insurance policy. Remember that this is a policy you want when starting a business. Our quote technology will help you find a carrier that has an appetite for your business. Get a quote today.
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