If you run a business, you’ve probably heard the terms general liability insurance and professional liability insurance (also called errors and omissions insurance, or E&O).
They sound similar, and both protect your business. But they cover very different risks.
In plain language:
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General liability insurance helps protect your business if someone claims you caused bodily injury, property damage, or advertising injury.
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Professional liability insurance helps protect you if a client claims your business made a mistake, gave bad advice, or failed to deliver professional services properly.
Let’s break it down clearly so you know what’s covered, what isn’t, and what most Newfoundland and Labrador businesses actually need.
Summary: General Liability vs Professional Liability
Here’s the simplest comparison:
Commercial General Liability (CGL): “Someone got hurt or something got damaged because of my business.”
Professional Liability (E&O): “A client says my work, advice, or service caused them a financial loss.”
Both are important, and many businesses need both.
What Does General Liability Insurance Cover?
General liability insurance is designed to protect your business from common, real-world accidents and third-party claims.
It typically covers:
1) Third-Party Bodily Injury
If someone is injured because of your business operations.
Example: A customer slips on a wet floor in your office and gets hurt.
2) Third-Party Property Damage
If your business accidentally damages someone else’s property.
Example: You’re doing work at a client’s site and knock over equipment, causing damage.
3) Personal and Advertising Injury
This can include claims related to things like slander, libel, or copyright infringement in your marketing.
Example: A competitor claims your ad campaign damaged their reputation or used their content improperly.
4) Legal Defence Costs
Even if the claim is questionable, legal costs can add up fast. General liability typically helps cover those defence expenses.
What General Liability Insurance Usually Does NOT Cover
General liability is great, but it has limits. It usually won’t cover:
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Professional mistakes or bad advice
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Breach of contract (depending on wording)
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Employee injuries (that’s usually handled by workplace coverage or workers’ compensation)
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Damage to your own tools/equipment
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Cyber incidents (you’d need cyber insurance for that)
This is where professional liability becomes critical.
What Does Professional Liability Insurance Cover?
Professional liability insurance (often called E&O insurance) helps protect your business if you provide a service, advice, or expertise, and a client claims your work caused them harm.
It typically covers claims involving:
1) Errors, Mistakes, or Negligence
Example: A consultant makes an error in a report, and the client loses money acting on it.
2) Failure to Deliver a Service as Promised
Example: A project is delivered late or incomplete, and the client claims financial losses because of it.
3) Omissions (Something Important Was Missed)
Example: A professional leaves out a key detail that causes a client to make an expensive decision.
4) Legal Defence Costs
Even when you believe you did everything right, clients can still sue. E&O helps cover legal defence and potential settlements (based on the policy wording).
What Professional Liability Insurance Usually Does NOT Cover
Professional liability typically won’t cover:
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Bodily injury or property damage (that’s usually general liability)
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Intentional wrongdoing or fraud
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Employee-related claims
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Cyberattacks/data breaches (that’s cyber insurance)
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Damage to your own property
Quick Examples: Which Policy Would Respond?
Here are a few real-world scenarios to make it crystal clear:
Scenario A: Someone gets hurt in your office
A client trips over a power cord and breaks their wrist.
✅ General liability would typically apply
❌ Professional liability usually would not
Scenario B: You accidentally damage a client’s property
You’re doing onsite work and spill coffee on a client’s laptop.
✅ General liability would typically apply
❌ Professional liability usually would not
Scenario C: A client claims your advice caused a financial loss
You recommend a solution that doesn’t work, and the client says they lost revenue.
✅ Professional liability (E&O) would typically apply
❌ General liability usually would not
Scenario D: A client claims your work had an error
A bookkeeper makes a mistake that triggers penalties and interest.
✅ Professional liability (E&O) would typically apply
❌ General liability usually would not
Do You Need Both General Liability and Professional Liability?
In many cases, yes.
Lots of businesses have exposure in two directions:
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Accidents happen (slips, falls, damaged property)
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Clients rely on your expertise (advice, designs, services, recommendations)
Many service-based businesses should strongly consider both, like:
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Consultants and business advisors
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IT providers and managed services
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Accountants and bookkeepers
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Marketing agencies and designers
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Engineers and technical professionals
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Real estate-related services
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Health and wellness professionals (depending on licensing and coverage needs)
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Contractors (often need strong GL, sometimes E&O too, depending on scope)
And sometimes, a client contract will require both types of coverage before you can start work.
Common Confusion: “I Work From Home, So I Don’t Need Liability Insurance”
Even home-based businesses can face claims.
If you’re providing a service, advice, or professional work, you could still be exposed to:
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Allegations that your work caused financial loss
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Claims for missed deadlines or mistakes
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Contract disputes that turn into lawsuits
Your business location doesn’t eliminate risk; it just changes it.
How Much Coverage Do Businesses Usually Choose?
The right limit depends on your business size, industry, contracts, and risk exposure. But many Canadian businesses commonly carry:
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$1M or $2M general liability
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$1M professional liability (E&O)
Some industries require higher limits, especially if you work with large commercial clients or government contracts.
What Impacts the Cost of General vs Professional Liability Insurance?
Your pricing can vary based on things like:
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Business type and services offered
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Annual revenue
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Claims history
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Number of employees
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Contract requirements
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Where you operate (and if you work on-site)
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Coverage limits and deductibles
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Optional add-ons (like cyber, abuse, pollution, etc.)
One business may need straightforward general liability, while another may need broader professional liability wording because of the nature of the advice they provide.
The Bottom Line
The difference between general liability and professional liability insurance comes down to what type of claim you’re protecting against:
✅ General liability protects your business from claims like bodily injury, property damage, and certain advertising injuries.
✅ Professional liability protects your business from claims that your work, advice, or professional service caused a client financial harm.
And if your business interacts with the public and provides professional services, there’s a good chance you’ll want both.
Talk to a Broker About Your Business Liability Coverage
Every business is a little different, and insurance is never one-size-fits-all.
At Wedgwood Insurance, we help Newfoundland and Labrador business owners compare liability options, understand what their contracts require, and make sure their coverage actually fits the work they do today (not just what they did when they first started).
If you’d like, we can review your current policy and walk you through whether general liability, professional liability, or both make sense for your business.
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About Wedgwood Insurance
Wedgwood Insurance has offices in St. John’s & Corner Brook and is Newfoundland & Labrador’s largest independent insurance broker. We provide straightforward home, auto & business insurance advice.
With over 350 Google My Business reviews, experience the Wedgwood difference with expert advice from our dedicated team. We ensure that every client has the coverage that best suits their needs through upfront complimentary consultations and midterm reviews.
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