General liability vs. professional liability

General liability (GL) and professional liability (PL) are the two most-confused business insurance products. They cover entirely different risks, and most businesses need both.

General liability (GL)

General liability covers third-party bodily injury and property damage arising from your business operations:

• A customer slips in your office and breaks their wrist
• Your employee accidentally damages a client’s property while on-site
• A product you sell injures a consumer
• Your advertising is alleged to slander a competitor

Most landlords require GL. Most clients require GL before signing contracts. Coverage limits typically run $1M per occurrence / $2M aggregate.

Professional liability (PL) / Errors & Omissions (E&O)

Professional liability covers financial losses caused by professional services you provided:

• A consulting recommendation that costs the client money
• A coding error that causes a system outage
• An accountant’s advice that leads to an IRS penalty
• A medical professional’s diagnosis or treatment error (then called medical malpractice)

GL does NOT cover this — bodily injury and property damage are different from financial harm.

Who needs both?

Most service businesses, especially:

• Consultants and advisors
• IT/software services
• Designers and creatives
• Lawyers, accountants, financial advisors (typically called E&O)
• Engineers and architects
• Marketing agencies

Pure product businesses (e-commerce, retail) often need GL but may not need PL.

Typical costs

• GL for a small consulting firm: $400-800/year
• PL for a small consulting firm: $500-1,500/year
• Combined BOP (business owners policy with both): often cheaper than buying separately

Most carriers offer combined packages. Compare standalone vs. BOP pricing — the BOP often wins.