General Liability vs Professional Liability

General liability insurance and professional liability insurance protect your business from two very different types of risk. Understanding the distinction is important because most businesses need one or both, and having the wrong coverage leaves dangerous gaps.

General liability insurance (GL) covers third-party bodily injury, property damage, and personal/advertising injury. If a customer slips on a wet floor in your store and breaks their wrist, GL covers their medical bills and your legal defense. If your delivery driver backs into a client's fence, GL covers the repair. If a competitor sues you for slander based on a marketing claim, GL covers your defense costs. Most commercial leases require general liability coverage, and it's often a prerequisite for contracts with larger companies. Typical policies provide $1 million per occurrence and $2 million aggregate, with premiums ranging from $400 to $3,000+ per year depending on industry and risk.

Professional liability insurance — also called Errors and Omissions (E&O) insurance — covers claims that arise from your professional services, advice, or work product. If you're a consultant and your advice costs a client money, E&O covers the claim. If you're a web developer and a bug in your code causes a client to lose sales, E&O covers it. If you're an accountant and a tax filing error results in IRS penalties for your client, E&O covers the damages and your defense. This coverage is essential for any business that provides professional services, advice, or specialized expertise.

A single lawsuit can wipe out years of profits — or the entire business. General liability claims are common in any business with physical spaces or customer-facing operations. A slip-and-fall claim can easily reach $50,000-$200,000 in medical and legal costs. Professional liability claims can be even larger — a financial advisor's bad advice or an engineer's design error can result in million-dollar claims. Having the right coverage ensures that one bad incident doesn't become an existential threat to your business. Many clients and contracts now require proof of both GL and professional liability before they'll work with you.