How much does professional service business insurance cost?

Professional service businesses and professionals spend an average of $29 per month, or $350 per year, for general liability insurance.

Lawyers, security guards, consulting firms, and other professional service business owners may need this coverage in order to sign a commercial lease, get licensed, or work with certain clients.

General liability insurance covers legal costs when a third party (someone outside your company) files a lawsuit over property damage or a bodily injury. It also pays for advertising injuries, such as libel, slander, and copyright infringement.

For example, if a client trips over a loose rug at your office and injures themselves, they could file a lawsuit. A general liability policy would then help pay for your attorney's fees and other legal costs throughout the legal proceedings.

This is the average general liability insurance policy for professional service businesses that buy from TechInsurance:

Premium: $29 per month
Policy limits: $1 million per occurrence; $2 million aggregate

The cost of general liability insurance depends on several factors, including the policy limits you choose. When underwriting your premium, insurance providers will also consider your profession, the size of your business, and any subcontractors or additional insured endorsements you may have.

Fortunately, small business owners don't have to pay a lot for insurance. Among professional service businesses that buy with TechInsurance, 60% pay less than $30 per month for general liability insurance. Another 32% pay between $30 and $60 per month.

By choosing lower coverage limits or a higher deductible, you can reduce your premium to an amount that fits your professional service company's budget. Most service professionals (89%) choose $1 million per-occurrence and $2 million aggregate limits for general liability insurance.

The risks of your specific profession, such as event planner, notary, or recruiter, are a major factor when determining your insurance costs.

That might include:

• Whether clients come into your business
• The amount of foot traffic you have
• Interactions with client property
• The claims history of others in your profession

To some extent, you can predict how much you'll pay for insurance by looking at costs for similar businesses. On average, event planners pay a lower rate of $29 per month for general liability insurance, while exterminators and pest control pay a higher rate of about $117 per month.

Below you can see how much different service professionals pay for general liability coverage:

Small, low-risk professional service businesses may be eligible for a business owner’s policy, which costs an average of $47 per month or $566 annually.

A business owner's policy bundles general liability coverage with commercial property insurance at a lower rate than buying these policies separately. It protects against the most common liability claims and helps your business recover from fires, burglaries, windstorms, and similar incidents.

You can add business interruption insurance to a BOP to defend against the cost of a temporary shutdown tied to a covered property claim. For example, it would help pay for employee wages and the cost of renting an office while your travel agent office is closed for renovation after a fire.

The cost of a business owner's policy primarily depends on the value of your business equipment and other property. Other factors such as your business's size and location can also affect your premium

On average, professional service business owners pay $49 per month for workers' compensation insurance, or $583 annually.

State laws determine when you need workers' comp. In most states, you need it as soon as you hire your first employee. Only Texas and South Dakota do not have requirements for workers' comp, but it's still recommended.

Workers' compensation pays for medical expenses and provides disability benefits if you or an employee suffers an injury on the job, or develops an occupational disease.

For example, if a pest control worker inhales toxic fumes and gets severely ill, this policy would pay for their ambulance ride, medical appointments, and prescriptions. It also supplies part of the income they miss out on while they're recovering and unable to work.

Most workers' compensation policies include employer's liability insurance. This type of insurance helps pays for legal defense costs related to workplace injuries.

Though sole proprietors and independent contractors aren't often required to carry workers' comp, it's still a good idea to buy this coverage. If you're injured on the job, your health insurance plan will likely deny the claim, leaving you with hefty out-of-pocket medical bills.

The chance of an on-the-job injury is the biggest factor in determining workers' compensation insurance premiums.

As you can see, 52% of professional service businesses pay less than $50 per month for workers' compensation insurance. And 78% pay $100 or less per month for insurance coverage.

Insurance companies will take into account the number of employees you have, their occupational risks, and your claims history when calculating the cost of workers' comp.

Professional service businesses pay an average premium of $43 per month, or $516 annually, for professional liability insurance. This policy is also referred to as errors and omissions insurance, or E&O insurance.

Professional liability insurance covers legal costs related to accusations of professional negligence. For example, a recruiter could face a lawsuit for failing to fill a position with a qualified candidate by a deadline.

Below is the average professional liability policy for professional service companies that buy from TechInsurance:

Insurance premium: $43 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $1,000

Professional service businesses that rely heavily on technology may opt for technology professional liability insurance, which bundles professional liability insurance with cyber insurance. This policy not only covers accusations of negligence, but also data breaches that affect a professional service business's or client's operations.

In the technology industry, you'll often see technology professional liability insurance referred to as technology errors and omissions insurance (or tech E&O).

Among professional service businesses that purchase professional liability insurance coverage with TechInsurance, over half (57%) can expect to pay under $50 per month. Another 24% spend, on average, between $50 and $100 on their professional liability policy.

The cost of professional liability insurance depends on several factors such as the policy limits you choose, your business income, and your history of claims of negligence.

The cost of professional liability insurance is directly related to your risk of being sued over your work performance.

Examples of risk factors include:

• Errors or oversights
• Late or undelivered services
• Advice that causes a financial loss for your client

You can estimate how much you'll pay for coverage by looking at costs for similar professions. For instance, process servers typically pay a cheaper rate of $37 per month for professional liability insurance, while talent agencies pay a more expensive rate of about $136 per month.

Below you can see how much different service professionals should expect to pay for professional liability coverage:

Professional service companies spend an average of $123 per month, or $1,480 annually, for cyber insurance. Also known as cyber liability insurance or cybersecurity insurance, this policy helps pay for the cost of complying with your state's data breach laws.

A cyber insurance policy can cover expenses related to a data breach or cyberattack, including legal fees and customer notification costs. It is especially crucial for businesses that store customer information, such as credit card numbers or Social Security numbers.

The cost of cyber insurance primarily depends on the amount of sensitive information handled by your professional service business.

On average, professional service agencies spend $163 per month, or $1,954 per year, for commercial auto insurance.

Most states require this coverage for vehicles owned by a professional service business. If you get into an accident, it can help pay for medical expenses, property repairs, and legal costs. It also covers vehicle theft and vandalism.

Keep in mind that sole proprietors and independent contractors who drive their own vehicle for work will need extra coverage as well. Your personal auto policy won't cover work-related accidents, so you'll want to consider buying hired and non-owned auto insurance (HNOA).

HNOA provides liability coverage for personal, leased, and rented vehicles driven for work purposes.

Insurance companies consider many factors when determining the cost of a commercial auto policy. That includes your employees' driving records, the number of vehicles you own and their value, and the type of business you have.

Professional service business owners pay an average of $7 per month, or $87 per year, for surety bonds.

A surety bond guarantees that your professional service company will fulfill the terms of a contract. That might include finishing a project by a deadline, complying with regulations, or paying subcontractors and other involved parties fairly for their work.

If your business fails to meet the terms of the contract, the surety company will compensate your client for their financial loss. Unlike a business insurance policy, this money must be paid back to the company that issued the bond.

Some clients may require your professional service business to carry a bond before signing a contract. Even when it's not required, a bond is a good way to show clients that your business is dependable.

The cost of a surety bond, which includes fidelity bonds, is a percentage of the total bond amount.