How Much Is Professional Liability Insurance? 6 Factors That Affect Price
Do you own a small business, mental health practice, or other type of company? If so, you could benefit greatly from paying for professional liability insurance. Professional liability insurance—also known as medical malpractice insurance (for medical professions)—can help protect you in the face of a lawsuit. If you’re wondering, “How much is professional liability insurance?” read on to learn the factors that affect the price of your policy.
1. Your Business Type
When an insurance company quotes you for professional liability insurance, one of the primary factors it will take into consideration is your business type. The type of business you own plays a big role in how expensive a lawsuit from a customer or client could be.
If you own a medical practice, for example, and a patient sues for malpractice, this lawsuit could cost hundreds of thousands of dollars. However, if you own a landscaping company, a lawsuit may be a bit more affordable. At NOW Insurance, we insure a wide range of professions, and we always tailor our coverage to our customers’ business type. When you apply for professional liability insurance through our company, you can feel confident that you will receive the coverage you need for an affordable price.
2. Your Coverage Limits & Deductible
Another factor that affects the cost of any insurance premium is the coverage limits and deductible included in your policy. When you apply for professional liability insurance, you will choose the coverage limits you want to have.
The limits indicate the maximum amount of money your insurance policy will cover in the case of a lawsuit. There is typically a per claim limit and aggregate limit. Generally, the higher limits you choose for your policy, the more you will pay for your coverage. Additionally, your deductible amount will also impact the overall cost of your policy.
The deductible is the amount of money that you will need to pay before your insurance company will start covering the remaining costs. Generally, the lower your insurance deductible, the higher your premium. Finding a balance between your coverage limits and deductible will help you secure a professional liability insurance policy that makes sense for you.
3. Your Business History (& Previous Claims)
Your business’s history also plays a significant role in the amount you will pay for a professional liability insurance policy. Newer businesses typically have to pay more for insurance because they have a less extensive history.
If Insurance companies do not have much evidence of the business’s practices, responsibility, and attention to detail that can help them predict the company’s behavior, then rates are higher. Additionally, new businesses also tend to have a greater risk of making a mistake because of their lack of experience.
If you have car insurance, you know that submitting an accident claim can cause your insurance premium to increase. In the same way, having previous claims on your professional liability policy can increase the costs involved in having this type of insurance. If you have a history of professional liability claims, insurance companies may expect you to submit more claims in the future, racking up your costs.
4. Your Number of Employees
The number of employees that are involved in your business also has an effect on your professional liability insurance premium. This is because the more people there are working for your business, the more room there is for errors to occur. Any of your employees could make a mistake during their daily practices that result in a lawsuit, increasing your risk of needing to use your professional liability insurance.
5. Your Business’s Location
Your business’s location also plays a role in your insurance premium. Different states tend to have different legal procedures and costs. If you live in a state that typically has high legal costs, your premium may be a bit pricier than a state with historically low legal costs. Insurance companies typically use automatic processes to determine how your location will affect your premium.
6. Your Exact Coverage
Another answer to the question “How much is professional liability insurance?” is coverage. The coverage that you include in your professional liability policy will also impact the overall price you pay for your insurance policy. Different companies provide varying additional coverage options to choose from based on your situation. For example, a common one now is cyber liability. Cyber liability insurance protects your business in the case that you fall victim to a data breach, or cyber-attack.
While this type of insurance could save you thousands of dollars in the case of a breach, the added coverage means you’ll pay more in premium.
Only the Coverage You Need.
At NOW Insurance, we help you to determine that right amount of coverage that your business needs. You won’t pay for extras or add-ons that you won’t use or that could inflate your cost. If you’re shopping around for professional liability coverage, we can help.
Learn more about professional liability for healthcare practitioners and professional liability for business services or consulting.