General Liability vs. Professional Liability (E&O) Insurance
General liability answers 'you hurt someone or damaged their property'; professional liability answers 'your work or advice cost someone money'.
Almost every business needs general liability, because leases and contracts require it and any customer can be injured on your premises. Any business that gives advice, designs, reports or professional services also needs professional liability (errors and omissions), because general liability excludes financial losses caused by your work. If you've ever asked does business insurance cover lawsuits, the answer depends on which of these two policies the claim falls under. Size both with how much business insurance do I need, and see where they fit in our business insurance coverage and requirements hub.
| Key Dimension | General Liability (CGL) | Professional Liability (E&O) |
|---|---|---|
| What Triggers a Claim | Bodily injury, property damage, or personal and advertising injury (such as libel or slander) caused by your operations. | A financial loss to a client caused by your error, omission, negligent advice or failure to deliver professional services. |
| Why It Matters: A client who loses money because of your mistake has suffered no physical injury or property damage, so general liability won't respond. | ||
| Typical Example | A client trips over a cable in your office and breaks a wrist. | A client says your campaign, code or financial advice caused $200,000 in lost revenue. |
| Why It Matters: Most service businesses face the second kind of claim far more often than the first. | ||
| Coverage Trigger | Usually occurrence-based: the policy in force when the injury happened responds, even if the suit comes years later. | Usually claims-made: the policy in force when the claim is made responds, for work after the retroactive date. |
| Why It Matters: Cancelling a claims-made policy without tail coverage can leave past work uninsured; see can you cancel business insurance at any time and extended reporting period. | ||
| Defense Costs | In the standard form, paid in addition to the policy limit. | Often paid within the limit, so legal fees reduce what's left for settlements. |
| Why It Matters: A $1 million E&O policy can shrink sharply after a long legal fight, so E&O limits often need to be higher. | ||
| Who Requires It | Landlords, client contracts, licensing boards and event venues. | Client contracts, especially in IT, consulting, design and finance, and some professional licenses. |
| Why It Matters: Read your contracts: many now ask for both policies, each with its own limit. | ||
| What It Doesn't Cover | Professional errors, employee injuries, employment claims, auto accidents, property in your care. | Bodily injury and property damage, intentional wrongdoing, fines, and theft losses (see commercial crime insurance). |
| Why It Matters: The two policies are designed to fit together, with almost no overlap. | ||
Use our open-source actuarial calculators to simulate deductibles, out-of-pocket exposure, and multi-policy trade-offs.
Frequently Asked Questions: General Liability vs. Professional Liability (E&O) Insurance
Direct answers to trade-offs, actuarial differences, and decision criteria.