Updated: June 22, 2025
Advertising & Editorial Disclosure
General liability insurance covers physical risks like customer injuries on your premises or property damage from your operations, while professional liability insurance protects against mistakes in your professional services.
Most businesses need general liability insurance, while only those providing professional advice or services for a fee need professional liability. Businesses offering both physical services and professional advice need both types of coverage.
Professional liability insurance costs more than general liability. Sole proprietors pay around $80 monthly for professional liability versus $28 for general liability, but costs depends on your industry and risk level.
General liability and professional liability insurance protect against different risks. Both types of insurance coverage protect against risks for different liability scenarios. General liability covers physical risks like property damage or bodily injury, whereas professional liability focuses on errors or omissions (often called E&O protection) in professional services.
The comparison table will help you decide if you need general liability, professional liability, or both.
General Liability | Professional Liability |
|---|---|
What it covers: Physical risks like injuries and property damage | What it covers: Mistakes in professional services and advice |
Common claims: Customer slips and falls, accidental property damage | Common claims: Errors in work, missed deadlines, negligent advice, faulty recommendations |
Who typically needs it: Businesses with physical locations, customer visits, employees | Who typically needs it: Service providers, consultants, professionals giving advice |
Business examples: Restaurants, retail stores, contractors, landscapers | Business examples: Accountants, lawyers, consultants, architects, real estate agents |
Often required by: Landlords for leases, clients for contracts, some licensing boards | Often required by: Professional licensing boards, client contracts, government contracts |
What it doesn't cover: Professional mistakes, cyber issues, employment practices | What it doesn't cover: Physical injuries, property damage, criminal acts |
State requirements: Some states require for contractor licensing | State requirements: Required for lawyers in Idaho/Oregon, required for some insurance and real estate agents |
Policy Cost: Guide to the Cheapest General Liability Insurance | Policy Cost: Guide to Professional Liability Costs |
Most businesses with physical operations, customer interactions, or employees need general liability coverage. This insurance protects against the most common business risks that can result in expensive lawsuits.
Any business with a retail location, office, employees, or products should have general liability insurance. Service providers who work at client sites or interact with customers in person also need this coverage. We also analyzed claims data and found these businesses have the highest general liability risks:
General liability insurance protects your business from three main areas:
Cover medical expenses and legal costs when someone gets hurt on your property or because of your business operations. A customer slipping on a wet floor at your café falls into this category.
Pays for repairs or replacement when you accidentally damage someone else's property. If your landscaping crew damages a client's irrigation system, general liability covers the repair costs.
Protects against lawsuits for slander, libel, or copyright infringement. If you accidentally use a copyrighted image in your marketing without permission, this coverage handles the legal expenses.
When It's Required
While states only require general liability in rare cases, it becomes required for:
Examples of general liability claims include:
Any business that provides professional services, advice, or expertise should consider professional liability coverage. This insurance protects against claims that your professional work caused clients financial harm.
Our research shows these professionals face the highest risk of professional liability claims:
Professional liability insurance protects against claims that your professional services caused financial harm:
Covers mistakes in your work that cost clients money. An accountant who makes a calculation error resulting in IRS penalties would be covered under this provision.
Protects you when your recommendations don't work out as expected. A business consultant whose strategy causes a client to lose market share could face a negligent advice claim.
Covers situations where you don't complete work as promised. Missing a big deadline that costs your client a business opportunity falls under this coverage.
Applies when clients claim you didn't meet the standard of care expected in your profession.
Professional liability becomes required in these situations:
Here are common professional liability claims by industry:
Use these questions and risk factors to determine which coverage makes sense for your situation.
If yes, you need general liability for slip-and-fall accidents, property damage, and similar incidents.
If yes, you need professional liability for errors, omissions, and bad advice claims.
General liability covers damage you accidentally cause to client property during your work.
Professional liability covers financial losses clients have from your errors or missed deadlines.
High general liability risk factors:
High professional liability risk factors:
Many businesses have risks that require both general and professional liability insurance because a single incident can trigger claims under both policies. Take an IT company installing new servers at a client's office - if a technician accidentally damages the client's equipment during installation, that's a general liability claim. But if the software configuration doesn't work properly and causes the client to lose business, that becomes a professional liability claim. In this instance, the business would want both coverages.
Businesses most likely to need both types of coverage include IT companies, architecture firms, fitness studios, financial advisors and accountants, real estate and insurance agents, and medical practices. Any business that faces both physical risks and provides professional services should consider dual coverage.
We analyzed pricing data from major insurers and found that professional liability costs more than general liability due to higher claim amounts and complex legal disputes.
General liability insurance is the more affordable option, with sole proprietors paying around $28 monthly and LLCs averaging $67 monthly. Contractors and higher-risk businesses typically pay $80-$150 monthly.
Professional liability insurance costs more due to complex claims and higher settlement amounts. Sole proprietors pay around $80 monthly while other professional service providers range from $120-$250 monthly.
Note: These quotes are based on small businesses with 1-5 employees. Large companies with more employees, higher revenue, or complex operations can expect to pay more for both types of coverage. Insurance companies typically offer 10% discounts when companies bundle both policies.
What Affects Your Cost
Whether shopping for inexpensive general liability insurance, the best professional liability insurance or both, the steps below can help you obtain the right coverage for your needs.
Evaluate the specific risks associated with your industry and operations. This will help you determine the type and amount of coverage required.
Look for reputable insurance companies with experience in your industry. Compare quotes, coverage options and customer reviews to find the best fit for your business.
Carefully review each policy's coverage limits, exclusions and deductibles to ensure they cover your business's specific risks and provide adequate protection.
Consult an insurance broker or advisor for tailored recommendations. They can clarify any uncertainties about coverage and suggest policies that best suit your needs.
Inquire about discounts you qualify for, such as bundling policies or having a good claims history.
Review all terms and conditions thoroughly once you have selected the best policy. Make sure you understand the coverage details before finalizing the purchase.
General liability covers physical risks like customer injuries and property damage and professional liability protects against financial losses from mistakes in your professional services or recommendations.
You need both if your business has physical risks (customer visits, employees, products) and provides professional services or advice that could cause clients financial harm.
Most states don't require it, but many landlords, clients, and contractor licensing boards mandate general liability coverage before you can do business.
Any business that provides advice, consulting, or professional services for a fee should have professional liability coverage to protect against claims of errors or negligence.
No, general liability covers injuries to customers and third parties, but employee injuries require separate workers' compensation insurance.
Yes, many insurers offer both types and bundling them together often saves 10-15% compared to buying separate policies.
Yes, if you have clients visit your home office, work at client sites, or provide professional services, your homeowners insurance won't cover business-related claims.
About Melissa Wylie
Melissa Wylie is the Content and SEO Manager at MoneyGeek, with nearly a decade of editorial experience and six years of work in financial content focused on small businesses. She previously held SEO positions at Bankrate and LendingTree, with bylines on ValuePenguin and MagnifyMoney.
Wylie has a journalism degree from the University of North Texas. Her strong foundation in journalism helps her craft content that simplifies complex financial topics to help everyone feel confident when making decisions with their money.
