Professional Liability vs General Liability Insurance
Many business owners confuse professional liability and general liability insurance. They cover fundamentally different risks. Here is everything you need to know to decide which policy (or both) you need.
Updated 26 March 2026
Professional Liability (E&O)
Protects against financial harm claims from professional errors
What It Covers
- ✓Negligent professional advice
- ✓Mistakes or errors in work product
- ✓Failure to deliver contracted services
- ✓Breach of professional duty
- ✓Misrepresentation in professional capacity
Typical Cost
$500 - $10,000+ per year depending on profession and revenue
Policy Type
Claims-made (most common)
Who Needs It
Any business that gives advice, provides services, or creates work product for clients
General Liability (GL)
Protects against physical injury and property damage claims
What It Covers
- ✓Third-party bodily injury
- ✓Third-party property damage
- ✓Advertising injury / defamation
- ✓Products liability
- ✓Premises liability
Typical Cost
$400 - $5,000+ per year depending on industry and revenue
Policy Type
Occurrence-based (most common)
Who Needs It
Almost every business with a physical presence, employees, or client contact
Who Needs Which Policy?
| Business Type | GL Insurance | E&O Insurance |
|---|---|---|
| Freelance consultant (remote) | Usually not | ✓ Yes |
| IT / software developer | Usually not | ✓ Yes |
| Accountant / CPA | ✓ Yes | ✓ Yes |
| Law firm | ✓ Yes | ✓ Yes |
| Restaurant / cafe | ✓ Yes | Usually not |
| Retail store | ✓ Yes | Usually not |
| General contractor | ✓ Yes | Usually not |
| Marketing agency (with office) | ✓ Yes | ✓ Yes |
| Financial advisor | Usually not | ✓ Yes |
| Real estate agent | ✓ Yes | ✓ Yes |
These are general guidelines. Your specific situation may require different coverage. Consult a licensed insurance broker for personalised advice.
The Core Difference: Physical vs Financial Harm
The simplest way to remember the difference is this: general liability covers claims that your business caused physical harm (someone got hurt, something got broken), while professional liability covers claims that your work caused financial harm (a client lost money because of your advice or service).
A consultant who gives bad advice that causes a client to lose $100,000 on an investment would not be covered by GL insurance. They need E&O. A contractor who breaks a client's antique furniture while working would not be covered by their E&O policy. They need GL.
Many professional service businesses with physical offices need both. An accounting firm with a client-facing office needs GL for slip-and-fall and property exposure, and E&O for professional errors. A remote freelance developer likely only needs E&O since they have no physical client exposure.
Estimate Your E&O Cost
Get a personalised professional liability estimate by profession.
E&O Estimator