Several factors can contribute to the cost of professional insurance coverage, including:
Type of business/services you offer
The type of services you provide and the industry you operate in can impact the cost of professional liability coverage. The risk profiles of different businesses and professions differ significantly.
If your company deals directly with clients, your insurer may view it as a higher risk. As a result, an accounting firm's professional liability insurance cost is likely to be greater than a landscaping firm. Similarly, an optician has a lower risk than an ophthalmologist, despite the similarity of their professions.
Level of expertise
Your professional liability quote may be a little more expensive if you've been in business for only a few years. Many insurers believe that the less expertise you have, the higher the risk you pose. If your company has been running for several years and has a track record of financial security, your estimate may be less.
You can specify the coverage limits you desire in your professional liability insurance policy when you purchase it. These limits might be anywhere from $250,000 to $2 million.
Number and types of employees
Your premiums may increase if you cover many key employees with your PLI. That's why it's critical to notify your agency if you later fire or hire personnel. If someone stops working for you, you don't have to continue paying for their insurance.
If you hire independent contractors who don't have professional liability insurance of their own, you may need to cover them in your policy.
Type of clients
Your insurance cost may be extremely high if your clients invest a significant amount of money in your business and are likely to lose a big chunk of it if something goes wrong.
For example, a software developer who works with clients who handle a lot of financial transactions may have a high insurance rate because there are large amounts of money involved.
In that case, extra insurance to handle the claim would be needed because the damages could be up to millions of dollars. This is why we’ll inquire about the cost of your most significant projects in order to assess this kind of risk.
Professional liability costs can rise if your company has a history of professional liability claims. This is why it makes sense to make sure your company has a comprehensive training program to limit the chance of errors in your services to avoid potential claims.