General Liability vs. Professional Liability Insurance
General liability covers physical harm you cause to people and property; professional liability covers financial harm caused by your mistakes, advice, or missed deadlines.
Every business with customers, a storefront, or a client site needs general liability. It is the policy landlords and contracts demand, and it pays for bodily injury and property damage to third parties (see what liability insurance covers). If you sell advice, designs, or professional services, add professional liability (E&O): a client who loses money because of your error has no claim under general liability. Most consultants, agencies, accountants, and contractors with design duties need both. Neither policy covers your own employees' injuries (does general liability insurance cover employee injuries) or theft of your own property (does liability insurance cover theft). Size your limits with the Coverage Calculator.
| Key Dimension | General Liability (CGL) | Professional Liability (E&O) |
|---|---|---|
| What Triggers a Claim | Bodily injury, property damage, or personal and advertising injury (libel, slander, copyright in ads) to a third party. | A negligent act, error, or omission in your professional services that causes a client financial loss. |
| Why It Matters: A client who trips in your office is a CGL claim. A client who loses $200,000 because of your faulty advice is an E&O claim. Filing under the wrong policy means a denial. | ||
| Who Needs It | Virtually every business with physical premises, customer contact, products, or work at client sites. | Consultants, accountants, IT and software firms, architects, engineers, real estate agents, marketers, and anyone paid for expertise. |
| Why It Matters: Many client contracts require both. A missing E&O policy can block you from winning enterprise or government work. | ||
| Policy Trigger | Usually occurrence-based: covers incidents that happen during the policy period, even if the claim arrives years later. | Usually claims-made: the claim must be made and reported while the policy is active, for work after the retroactive date. |
| Why It Matters: Cancel a claims-made E&O policy without buying tail coverage (an extended reporting period) and claims for past work go uninsured. | ||
| Defense Costs | Typically paid outside the limit under Supplementary Payments, so legal fees do not reduce the money available for settlements. | Often paid inside the limit (eroding limits), so every legal invoice shrinks what is left to pay the claim. |
| Why It Matters: A $1M E&O policy with $300,000 in defense costs leaves only $700,000. See does liability insurance cover legal fees and the duty to defend. | ||
| Typical Limits and Cost | $1M per occurrence / $2M aggregate is standard; small businesses pay a median of about $45 per month. | $500,000 to $2M per claim; cost varies widely by profession, revenue, and claims history, from under $50 to several hundred dollars a month. |
| Why It Matters: CGL is inexpensive because physical injury claims at low-risk offices are rare. E&O pricing reflects how much financial damage your advice could cause. | ||
| Key Exclusions | Professional services, employee injuries, autos, your own property, care-custody-control, and expected or intended injury. | Bodily injury and property damage, intentional or fraudulent acts, contractual guarantees, and prior known claims. |
| Why It Matters: Each policy excludes what the other covers. Buying only one leaves a predictable gap. Check every exclusion on both before signing a client contract. | ||
Use our free calculators to simulate deductibles, out-of-pocket exposure, and multi-policy trade-offs.
Frequently Asked Questions: General Liability vs. Professional Liability Insurance
Direct answers to trade-offs, actuarial differences, and decision criteria.