Commercial General Liability vs. Professional Liability: Know the Difference

Originally published 2/21/2024; updated /2025

Whether you are a business owner, contractor, or freelancer, understanding the difference between Commercial General Liability and Professional Liability insurance is crucial.  While both coverages protect your business from potential risks and lawsuits, they have unique features and coverage areas that set them apart.

In this article, we will explore the key differences between General Liability and Professional Liability insurance so that you can make an informed decision about which one is right for your business.

Key takeaways

• General Liability vs. Professional Liability: General liability covers physical harm (property damage, bodily injury, advertising injury), while professional liability covers financial harm from errors, negligence, or bad advice.

• Who needs each policy: General liability is essential for trade-based businesses like contractors, while professional liability is critical for service providers such as doctors, consultants, and lawyers.

• Risk focus: General liability protects against risks in everyday business operations, while professional liability protects against risks tied to professional services.

• Choosing the right coverage: Evaluating your industry and business risks helps determine whether you need one policy, the other, or both for full protection.

What is Commercial General Liability (GL)?

Commercial general liability insurance, also known as "business liability insurance" or "general liability insurance," is a type of policy that protects businesses from financial losses due to property damage, bodily injury, and advertising or personal injury claims. It covers expenses related to physical and non-physical harm caused to third parties by your business operations.

What is Professional Liability Insurance?

Professional liability insurance, also known as "errors and omissions insurance," is specifically designed to protect businesses that provide professional services from claims of negligence or mistakes in their work. This type of policy is crucial for professionals whose work involves providing advice, expertise, or recommendations to clients.

Key Differences Between General and Professional Liability Insurance

To summarize, here are the key differences between Commercial General Liability and Professional Liability insurance:

Coverage

General liability covers property damage, bodily injury, and personal/advertising injury while professional liability covers negligence or errors in your professional services.

Targeted industries

General liability is more suitable for trade-based businesses such as contractors, while professional liability is more geared towards professionals such as doctors, lawyers, and consultants.

Types of claims covered

General liability covers physical harm or damage to third parties, while professional liability covers financial losses or damages resulting from professional errors or negligence.

Importance for businesses

While both types of insurance are crucial for protecting your business, the need for professional liability insurance is higher for businesses that provide professional services.

Risks covered

General liability covers risks associated with business operations, while professional liability focuses on risks related to your professional services.

Understanding the difference between General Liability and Professional Liability insurance is essential for making an informed decision about the type of coverage your business needs. By evaluating the specific risks your business faces, you can choose the right insurance policy that provides adequate protection for your business. Remember to review your policies regularly and make necessary updates as your business evolves to ensure that you have comprehensive coverage at all times. So, be proactive and protect your business with the right insurance! 

faqs

Q: What is the main difference between general liability and professional liability insurance?
A: General liability covers physical harm like property damage and bodily injury, while professional liability covers financial losses from errors, negligence, or bad advice.

Q: Do small businesses need professional liability insurance?
A: Yes. Any business that provides advice, expertise, or professional services should have professional liability insurance.

Q: Can a business carry both general liability and professional liability insurance?
A: Absolutely. Many businesses need both to stay protected from physical risks and professional service-related risks.

Q: Which industries benefit most from general liability insurance?
A: Contractors, construction companies, retailers, and other trade-based businesses.

Q: Which industries need professional liability insurance?
A: Service-based businesses like consultants, accountants, lawyers, and healthcare providers.