Commercial General Liability (CGL) insurance and Professional Liability insurance (also known as Errors and Omissions insurance or E&O insurance) are two distinct types of business insurance that provide coverage for different types of risks. Here's a comparison between the two:
Commercial General Liability (CGL):
CGL insurance provides coverage for claims related to bodily injury, property damage, and personal/advertising injury that your business may cause to third parties. It typically covers incidents that occur on your business premises or as a result of your business operations.
Professional Liability (PL) or Errors and Omissions (E&O):
Professional Liability insurance is designed to protect professionals and businesses against claims arising from mistakes, negligence, or errors in the professional services they provide. This includes claims related to professional advice, services, or recommendations that result in financial losses for clients.
Types of Businesses Covered:
CGL: It is more commonly associated with businesses that have a physical presence or engage in activities that may pose a risk to third parties, such as slip-and-fall accidents at a store or property damage caused by construction work.
PL or E&O: This type of insurance is typically tailored to businesses and professionals who provide specialized services or advice, such as lawyers, doctors, consultants, architects, IT professionals, and financial advisors.
Covered Claims:
CGL: Covers claims related to bodily injury, property damage, and personal/advertising injury caused by your business operations or premises. It can also include product liability coverage.
PL or E&O: Covers claims arising from errors, omissions, or mistakes in the professional services you provide. This can include claims of professional negligence, misrepresentation, or failure to deliver promised results.
Legal Costs:
CGL: Covers legal defense costs if you are sued for bodily injury, property damage, or personal injury.
PL or E&O: Covers legal defense costs as well as any settlements or judgments resulting from professional liability claims. It often includes coverage for the cost of hiring experts to defend your case.
Industry Specific:
CGL: Applicable to a wide range of businesses across various industries.
PL or E&O: More specialized and tailored to specific professions and industries where professional advice or services are provided.
Claims Frequency:
CGL: Claims tend to be more frequent in industries where physical accidents or property damage are common, such as construction or retail.
PL or E&O: Claims are more common in professions where advice or services can lead to financial losses or disputes, such as law, finance, healthcare, or consulting.
Commercial General Liability insurance and Professional Liability insurance serve different purposes and cater to different types of businesses. CGL primarily covers bodily injury and property damage claims resulting from general business operations, while PL or E&O insurance is designed to protect against claims arising from professional errors or negligence in specialized services or advice. Many businesses may benefit from having both types of insurance to ensure comprehensive coverage.