Professional Liability Insurance
General Liability vs. Professional Liability. Key Differences
General Liability vs. Professional Liability, Key Differences, what contractors need to know to protect against professional liability claims. Trade Safe arranges professional liability insurance for contractors who give advice, design input, or specs beyond the physical work, so a contractor understands the policy before a claim happens.
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Two Policies That Protect Against Completely Different Risks
Professional liability insurance (also called Errors & Omissions or E&O) protects contractors when a client claims your professional advice, design input, or project management decisions caused them financial harm. It covers legal defense costs and settlements, gaps that general liability leaves wide open.
General Liability: Physical Harm to Others
General liability (GL) covers bodily injury and property damage you cause to third parties during your work. If a worker drops a tool and injures a bystander, or your crew damages a client’s flooring, GL responds. It’s the foundational coverage for any contractor.
Professional Liability: Financial Harm from Your Expertise
Professional liability covers financial harm a client suffers because of your professional services, advice, or design work. No physical damage needs to occur, the client claims your professional decisions cost them money. GL won’t touch this claim.
A Scenario That Illustrates the Difference
You’re an HVAC contractor who sizes and installs a commercial HVAC system. If the system falls and injures someone, GL covers the bodily injury. If the system is sized wrong and causes $200,000 in energy overcosts and comfort complaints, that’s a professional liability claim. GL pays nothing.
Claims-Made vs. Occurrence Forms
GL is typically written on an occurrence form. Coverage applies to incidents that occur during the policy period regardless of when the claim is filed. Professional liability is almost always claims-made. Coverage depends on when the claim is filed, not when the work was done.
Do You Need Both?
Any contractor who provides professional services, advice, design input, specifications, construction management, needs both GL and professional liability. They protect against fundamentally different risks and neither substitutes for the other.