These two coverages are confused more than almost any others, and the confusion is expensive because they do not overlap. One covers physical harm. The other covers financial harm. A claim that lands in the gap between them generally gets paid by no one.
General liability vs professional liability
| General liability | Professional liability (E&O) | |
|---|---|---|
| What it covers | Bodily injury and property damage you cause | Financial loss from a mistake in your professional work |
| Example | A client trips at your office | A client sues over bad advice or a missed detail |
| Who needs it | Almost every business | Businesses that sell advice or services |
| Form | Usually occurrence | Usually claims-made |
General liability: physical harm to others
General liability generally responds when your business causes bodily injury or property damage to a third party. A customer slips in your store. Your crew damages a client’s property. Someone is hurt by your operations. It also generally covers the legal defense, which can arrive whether or not the claim has merit. What it generally does not cover is harm caused by your professional work itself.
Professional liability: financial harm from your work
Professional liability, also called errors and omissions, generally responds when your advice, design, or service causes a client a financial loss. A missed deadline, a flawed recommendation, a service that did not perform as promised. These claims are about money, not physical injury, which is generally the kind of claim general liability excludes. For accountants, consultants, designers, technology firms, and real estate professionals, this is often the coverage that meets how they actually get sued.
Why most service businesses need both
If your business can both hurt someone physically and cost a client money through a mistake, you generally have both exposures. A contractor whose work injures a bystander may rely on general liability; the same contractor whose design error causes a loss may rely on professional liability. Carrying one and not the other can leave a predictable gap.
Getting the split right
The cleanest way to avoid the gap is to map your real exposures and confirm which policy responds to each. A coverage review does exactly that, and it often surfaces a contract requirement you did not realize you were missing.
Questions to ask your advisor
- Does my business face both physical-harm and financial-harm claims?
- Do I carry both general liability and professional liability, or just one?
- Does any client contract require professional liability or E&O?
- If my professional liability is claims-made, is my retroactive date protected?
- Did adding a service line create a professional exposure I have not covered?
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