How Much Does Lawyer Malpractice Insurance Cost?

The Factors Impacting Attorney Malpractice Insurance Rates

If you’re a practicing attorney, or you’re about to become one, you’ve probably heard about the importance of legal malpractice insurance. You might wonder if it’s just another meaningless expense, or if it could really have an impact on your practice or your firm. Not carrying malpractice coverage — or carrying the wrong kind of policy — can leave you as a solo attorney or the owner of a small firm in a difficult financial position. The cost of professional liability coverage is a wise and worthy investment for any firm or practice. Read on to learn why, and how to choose a policy that’s right for you.

What is Legal Malpractice Insurance?

Also known as professional liability insurance, this type of coverage protects you if a client claims you made a mistake that caused them harm. These mistakes could be used to allege malpractice due to negligence, errors, or omissions. If the client believes your action (or inaction) caused them financial loss or harm, having the right insurance coverage can help cover the costs of defending yourself, including attorney’s fees, court costs, and resulting settlements or judgments.

Even if a claim brought against you has no merit, professional liability insurance provides you with peace of mind by shielding you from potentially damaging high costs of legal defense. For many attorneys, especially those in private practice, it’s more than just protection. It’s a critical part of ethically and responsibly upholding the law.

Average Cost in 2025

There is no industry-wide accepted average cost for legal malpractice insurance, as the costs vary widely based on many factors (noted below) and can fluctuate greatly between states. In general, the average cost for professional liability insurance will depend on who is being insured:

A new solo attorney (practicing five years or less) will cost the least on average.
Solo attorneys with moderate risk (in practice more than five years) will cost slightly more.
Small firms of 2-5 employees will have a moderate cost.
High-risk firms or larger firms will have the highest average cost.

Legal Malpractice Insurance Cost by Policy Type

Professional liability insurance pricing is influenced by the type of policy an attorney secures; namely, whether it is a claims-made policy or an occurrence policy. Understanding the difference is key when evaluating short-term premiums and long-term protection.

Claims-Made Policies vs. Occurrence Policies

So, what are the actual differences in coverage and pricing between claims-made and occurrence policies?
Claims-made policies are the most common type of legal malpractice insurance. With this sort of policy, coverage only applies if the claim is made while the policy is active, if the incident in question also occurred during the policy period (or after a set retroactive date). If the policy isn’t active when a claim is made, even if the incident happened while it was, you won’t be covered. Because of this, many attorneys purchase tail coverage when switching insurers or when retiring to protect against future claims.

Claims-made policies offer lower premiums and more cost savings in the first few years, but over time, those premiums go up considerably.

Occurrence policies, on the other hand, cover any incident that happened during the policy period, no matter when a claim is filed, even years after the policy has ended. This makes them more predictable and easier to manage in the long run, but that also means they come with higher up-front premiums.

Factors That Impact Cost

The annual cost of a law firm’s malpractice insurance policy can vary greatly from firm to firm, due to several factors. The main factors that impact legal malpractice insurance rates include a firm’s area of practice, location, size, years in practice, prior claims, desired coverage limits, and risk management discounts. Here’s more on what you should consider when estimating legal malpractice costs:

Area of Practice

Your firm’s area of law and caseload within each area are primary considerations an insurance company will make in determining your malpractice insurance policy’s annual premium.

Certain areas of practice, such as intellectual property, class actions, securities, real estate, corporate tax, entertainment, and civil litigation-plaintiff, experience higher-than-average claim frequency and severity, which typically yields a higher annual premium compared to other low-risk areas of practice. Personal injury and family law are also often considered higher-risk areas of law, and may come with higher costs.

“The lowest rates are typically for defense firms,” said Ryan Fox, an underwriter at Aon Attorneys Advantage. “Typically, such firms are among the lowest risk of being sued.”

While defense attorneys may not experience as many legal malpractice claims, they are still advised to carry insurance due to other risks. “Instead, we see a lot of disciplinary complaints,” Fox said. “If your client is in jail and feeling vindictive, it doesn’t cost them anything to file a complaint with your state licensing board.”

Geographical Location

The state in which your firm practices, and in some instances the location within the state, contribute to your policy’s annual premium. One factor that typically varies from state to state is how much your firm charges for services rendered on an hourly basis, with law firms in metropolitan areas typically charging more than firms in rural areas. Firms that charge higher rates typically see higher claims.

“As a result, an attorney living in Los Angeles is going to pay more than an attorney living in rural Iowa,” Fox said. “Some states have multiple underwriting territories. In Florida, our primary program has three underwriting territories, with law firms in the Miami/Dade County area paying more than attorneys in other parts of the state.”

Some insurance carriers may limit their exposure in certain states due to the performance of their book (how many claims they have paid out in that state). They also may not write in certain states due to filing restrictions, as an admitted insurance program is required to be filed in every state in which it is available.

Size of Firm

Unlike other professions, whose annual malpractice insurance premiums are determined based on a firm’s annual revenue, law firms are rated according to the number of attorneys in the firm.

“This is because of the way attorneys bill by the hour,” Fox said. “For an insurance carrier, including those carriers that work with the Aon Attorneys Advantage program, it’s easier to judge the amount of risk they are accepting by the number of attorneys in the firm, and the number of cases each is handling.”

Claim History

Past and pending claims can impact not only the cost of your firm’s policy, but also your eligibility.

Firms with a lengthy claims history, particularly in the past five years, are not eligible for an admitted policy and would need to seek coverage through a non-admitted carrier, which typically charges a higher premium for similar coverage. The Aon Attorneys Advantage program works with both admitted and non-admitted carriers to ensure a range of coverage options for our clients’ diverse risk profiles.

Desired Level of Coverage

Another rating factor is your firm’s desired level of coverage. While smaller firms typically purchase $1 million limits, our admitted program writes limits as high as $5 million. Deductible limits range between $0 and $15,000, with higher deductibles yielding lower annual premiums.

“Our admitted policy offers additional claim defense expenses paid outside the policy limits,” Fox said. “The amount of additional defense expenses included with the policy depends on your coverage limit.” For example, a $1 million policy includes up to $250,000 of additional defense expenses, and a $5 million policy includes up to $500,000 of additional defense expenses. There is no additional charge for this feature. The benefit of this type of coverage is that it leaves more coverage for any potential settlements. Conversely, if a policy pays defense costs inside the policy limits, it eats away at the limits available for any judgements against you.

How to Secure Lower Premiums

As there are no set pricing parameters for legal malpractice insurance, you may find the costs are all over the board. However, there are factors to consider and steps you can take to reduce your premium and pay less for optimal coverage.

Length of Time Without a Malpractice Claim

Insurance companies will look at your prior claims before offering you a quote. If your firm has been claims free for the last five years, you may be given a discount.

Implementation of Risk Management

If you can demonstrate the use of risk management practices in your firm, including engagement/disengagement/nonengagement letters, docket control, and conflict of interest avoidance waivers, you may also receive a discount.

Complete Continuing Education

You may also receive a discount if you take continuing legal education courses. Continuing education (CE) is often considered a risk management strategy, so some insurance providers will see your efforts as part of risk mitigation. You will likely need to provide proof of course completion to qualify.

“The percentage of these credits varies by state and by the size of the firm,” Fox said. Firms in our admitted program are encouraged to use the three free CLE credits provided annually by the policy to help reduce their rates.

Look for Policies with Step Rating

Most lawyers’ malpractice insurance policies are offered on a claims-made basis, as mentioned above. These policies, as noted, use a step rating approach to premiums, meaning they start out low, but increase over time, as the practicing attorneys risk and period of coverage also grows.

“A feature of a claims-made policy is that it is step rated,” Fox said. “Because a new attorney just starting out in business generally has few clients, their risk is lower than a more established firm. So, an insurance carrier offers a reduced rate in the first few years of such a policy.”

In most states, our admitted policy has six steps. In the first year of your policy, the step increase can be anywhere from 30% to 50%. Each year the percentage of the step increase goes down, until the policy matures in the seventh year and you are paying the mature rate.*

“This is one of the most misunderstood features of a claims-made policy,” Fox said. “It leads some attorneys to believe they’re getting hit with a rate increase every year for six years. As you build your client base, your risk increases, you experience a step increase and your rate goes up.”

Avoid the Cost of Going Bare

“Going bare” is insurance jargon for going without insurance. While carrying malpractice insurance is not mandatory in every state, having coverage can serve as an important layer of protection. It also says something about the professionalism of your firm.

While you may never have been sued, it can happen. All it takes is one client unhappy with the results of your work. Even if you didn’t make a mistake, you can still be sued and would need to mount a defense. As an attorney, you know better than anyone how much a lawsuit can cost in time and money.

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_{Aon Attorneys Advantage is the brand name for the brokerage and program administration operations of Affinity Insurance Services, Inc. a licensed producer in all states (TX 13695); (AR 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services Inc.; in CA, Aon Affinity Insurance Services, Inc., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency.

This article is provided for general informational purposes only and is not intended to provide individualized business, insurance or legal advice. You should discuss your individual circumstances thoroughly with your legal and other advisors before taking any action with regard to the subject matter of this article. Only the relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured.}