General Liability vs. Professional Liability for Contractors: What’s the Difference?

Between property damage disputes, client complaints and other costly claims, contractors who carry inadequate coverage can face significant financial setbacks. Understanding the distinction between general liability and professional liability is an important step in safeguarding your business.

What Is General Liability Insurance?

General liability insurance is considered a core policy for most contractors. It can help your business manage claims involving third-party bodily injury or property damage that may occur on your premises or as a result of your work. For example, if a client trips over your equipment at a job site or you accidentally damage a customer’s property, general liability insurance can help cover legal fees, medical costs and repair expenses. Additionally, it can offer financial support if your business faces advertising or personal injury claims.

What Is Professional Liability Insurance?

Professional liability insurance, sometimes called errors and omissions (E&O) insurance, addresses claims related to the professional services you provide. This coverage can be especially important for contractors, as faulty craftsmanship, poorly planned design work or inaccurate advice could cause significant losses. If a client alleges that your recommendations or plans caused them financial loss, or that your work failed to meet expectations, professional liability insurance can help cover legal defense and settlement costs.

When Do Contractors Need Each Type?

General liability coverage is worth considering even before you begin work on a job site, as physical risks are present from the outset. Professional liability is important for all contractors, including those who oversee entire projects, specialize in a specific craft or offer professional advice. Any of these functions could lead to scenarios where a client could later claim your services or recommendations caused financial harm. Many businesses carry both in their contractors insurance package, since a single project can involve both physical work and professional judgment. Additionally, many clients and contracts may require you to have either or both types of policies to even be eligible for the job.

Explore Your Options

The right mix of coverage depends on the type of contracting work you do. Contact Murray Insurance Services today to talk through your options and make sure you’re covered for the risks that actually match your business.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.