General Liability vs. Professional Liability Insurance: Understanding the Differences
Why the Distinction Matters
Business owners often confuse general liability and professional liability (errors and omissions). Both policies cover lawsuits, but they respond to different types of claims. Selecting the wrong policy-or skipping one-can leave critical coverage gaps.
What Is General Liability?
General liability insurance covers claims of bodily injury, property damage and advertising injury resulting from your business activities. It protects against injuries at your premises, damage to someone else’s property, reputational harm and advertising errors. For example, if a customer slips and falls or you accidentally damage a client’s equipment, general liability pays for medical bills or repairs.
What Is Professional Liability?
Professional liability insurance (also known as E&O) covers claims that your professional advice or services caused financial harm. It pays for legal defense and damages when you make a mistake or omission, such as incorrect tax advice or a missed deadline. Professional liability also covers negligence, misrepresentation and failure to deliver services. Consultants, accountants, engineers and others who provide specialized advice typically need E&O coverage.
Key Differences
Aspect | General Liability | Professional Liability |
What it covers | Bodily injury, property damage and advertising injury | Financial losses due to professional mistakes |
Examples of claims | Customer slips, sign falls, false advertising allegations | Software bug causes data loss, tax error penalties |
Who needs it | Businesses with physical locations or client interactions | Professionals offering specialized advice |
Common requirements | Leases, loans, client contracts | Client contracts, licensing boards |
When You Might Need Both
Some businesses need both policies. A design studio that meets clients in its studio needs general liability to cover visitor injuries and property damage, and professional liability to cover claims arising from design errors. A technology consultant working from home may need professional liability for coding mistakes and general liability if clients occasionally visit or if they rent office space.
Costs and Purchasing Options
Premiums vary based on industry risk, location and coverage limits. Some carriers offer package policies combining general and professional liability, while others allow you to add E&O coverage to a business owner’s policy. If you need both, bundling can reduce the overall cost.
Conclusion
General liability protects against physical injuries and property damage, whereas professional liability covers financial losses caused by professional mistakes. Evaluate your business operations to decide which policy – or combination – fits your needs. If you interact with the public and provide specialized advice, carrying both policies ensures comprehensive protection. To simplify the process, quickly compare general liability and professional liability insurance quotes online and select the coverage mix that best fits your operations.
