It is the most common insurance confusion among professional firms: thinking one liability policy covers everything. Errors and omissions and general liability cover completely different claims, and a firm that carries only one is often exposed on the other.
E&O vs general liability
| Errors and omissions (E&O) | General liability | |
|---|---|---|
| What it covers | Financial loss from a professional mistake | Bodily injury and property damage |
| Example | A client loses money from your error | A visitor is injured at your office |
| Who needs it | Firms that sell expertise | Almost every business |
| Form | Usually claims-made | Usually occurrence |
What E&O covers
Professional liability, or errors and omissions, covers claims that your professional work caused a client a financial loss, a mistake, an omission, missed advice, a deadline, a service that did not perform as promised. It includes the cost to defend even a meritless claim. For any firm that sells advice or expertise, this is the central coverage, because the central risk is being blamed for a client’s loss.
What general liability covers
General liability covers third-party bodily injury and property damage from your premises and operations, a client who slips at your office, damage you cause to a leased space. It is the everyday physical exposure, and it is what leases and many contracts require. But it does not cover professional mistakes.
The gap that catches firms
Here is the trap. A firm with only general liability is unprotected against the claim it is most likely to face, a client alleging the work caused a loss. A firm with only E&O may not meet a lease or contract that requires general liability. The two are not interchangeable, and the assumption that one covers the other is where firms get caught.
What to do
Most professional firms need both: E&O for the work and general liability (often packaged in a business owners policy) for the premises and contracts. A coverage review confirms you carry the right combination for your services and your agreements, rather than discovering the gap at claim time.
Questions to ask your advisor
- Which of these two policies do I actually carry today, and which am I missing?
- Would my current coverage respond to a client claiming my work caused a loss?
- Do my lease and client contracts require general liability, E&O, or both?
- Are my limits on each policy aligned with the size of my engagements?
- Where do these two policies leave a gap between them for my type of work?
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