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E&O vs General Liability: Which Claims Belong to Professional Liability Insurance (Errors & Omissions)?

Understanding whether a claim belongs to Professional Liability (Errors & Omissions, or E&O) or General Liability (GL) is critical for businesses in New York, California, Texas and across the USA. Pick the wrong coverage assumption and you’ll face denied claims, allocation battles, and uncovered defense costs. This guide explains exactly which claims belong to E&O, which belong to GL, how carriers allocate overlapping claims, and what you should budget to protect your business.

Quick summary

  • E&O (Professional Liability): Covers alleged negligent acts, errors, omissions, or breaches of professional duty in the delivery of professional services or advice.
  • General Liability: Covers third-party bodily injury, property damage, and certain advertising injuries (libel, slander, copyright infringement in advertising) arising from your operations or premises.
  • Most E&O policies are claims-made; GL policies are typically occurrence-based. This affects reporting, retroactive dates, and tail coverage.

What E&O (Professional Liability) covers

E&O is designed for professionals whose service, advice, or deliverable could cause a client to suffer a financial loss. Typical covered allegations include:

  • Negligent advice or incorrect professional recommendations (e.g., a financial advisor’s poor investment advice).
  • Errors or omissions in reports, designs, or deliverables (e.g., engineering plans with calculation errors).
  • Failure to perform agreed services (missed deadlines, incomplete work).
  • Breach of professional duty or standard of care (e.g., malpractice-type suits for architects, consultants).
  • Defense costs and settlements related to professional negligence (subject to policy terms and limits).

Industry examples:

  • A software consultant whose custom code caused a client’s transaction system outage and economic loss — typically E&O.
  • An accountant accused of misstating client tax positions leading to penalties — E&O.

What General Liability covers

GL protects against physical and some reputational harms to third parties unrelated to professional advice:

  • Bodily injury (a client slips and falls at your office).
  • Property damage (you damage a client’s property while on site).
  • Advertising injury (libel, slander, false advertising as part of marketing).
  • Medical payments and premises-related liabilities.

Industry examples:

  • A client trips over loose carpet at your office and breaks a wrist — GL.
  • Your employee accidentally drops a client’s laptop while delivering on premises, causing physical damage — GL (unless damage arises from professional services that were contractually guaranteed; see allocation below).

Side-by-side: E&O vs General Liability

Feature Errors & Omissions (E&O) General Liability (GL)
Typical trigger Alleged professional mistake, negligent advice, failure to perform Bodily injury, property damage, advertising injury
Policy form Usually claims-made Usually occurrence
Defense costs Often inside limits (varies) Usually outside or inside—depends on policy
Typical insureds Consultants, tech firms, architects, agents, accountants Retailers, contractors, offices, most businesses
Common exclusions Intentional acts, fraud, bodily injury (often excluded) Professional services, contractual liabilities (often excluded)

How to tell if a claim belongs to E&O (decision rules)

Ask these questions when a claim arises:

  1. What was the alleged wrongdoing? If it’s advice, design, or a professional service error → E&O. If it’s a physical injury or property damage → GL.
  2. Is the loss financial only or physical? Pure economic loss from poor advice → E&O. Physical injury or tangible property damage → GL.
  3. Does the complaint allege a breach of the standard of care for your profession? If yes → E&O.
  4. What remedy does the claimant seek? Damages for failed results or remediation costs → E&O. Medical bills, repair costs for physical damage → GL.

Examples:

  • Real estate agent fails to disclose a material defect, buyer sues for decreased value → E&O.
  • Construction contractor’s tool falls, injuring a passerby → GL.

Overlap, allocation disputes, and real-world fights

Many claims have mixed elements. A cybersecurity consultant’s faulty implementation could cause both data breach (cyber) and negligent design (E&O). Or a design professional’s flood of negligent drawings might cause physical property damage to a building and economic loss to an owner — carriers may fight over coverage allocation.

Key points:

  • Claims-made vs occurrence affects which insurer pays and when. E&O’s retroactive date and tail coverage can be decisive.
  • Allocation: Insurers will allocate defense costs and indemnity between covered and uncovered causes. If allegations are intertwined, carriers may jointly defend until allocation can be determined.
  • Contractual liability & indemnities often complicate which policy responds.

See also:

Pricing: what E&O and GL cost in the USA (examples)

Premiums vary widely by industry, revenue, claims history, location (e.g., NYC vs Houston), and limits. Typical ranges for small to mid-sized firms:

Company examples and published starting points:

  • Hiscox: advertises E&O and professional liability products for small firms with online quotes; many small-business E&O policies can start around $300–$600/year for low-risk professions. (https://www.hiscox.com/small-business-insurance)
  • The Hartford: commonly referenced for GL for small businesses with GL packages often beginning in the $400–$1,000/year range depending on exposure. (https://www.thehartford.com/business-insurance)
  • Chubb and AIG: typically serve higher-limits, larger-professional practices and can cost several thousand to tens of thousands per year for complex risks or licensed professionals in New York City, Los Angeles, or San Francisco.

Regional note:

  • Firms operating in high-cost, litigious markets like New York City or Los Angeles often pay 10–30% higher premiums compared with midwestern markets due to higher claim severity and legal costs. (See insurer regional guidance and industry premium differentials via insurer quoting tools.)

Practical buying tips (for firms in NY, CA, TX and nationwide)

  • Confirm E&O is claims-made: check retroactive dates, ensure prior acts coverage, and consider tail coverage at policy termination.
  • Confirm clear exclusions (contractual liability, bodily injury) so you know when GL must respond.
  • Maintain adequate limits: many professional clients require $1M per claim / $2M aggregate or higher; some sectors (legal, medical tech, architecture) should consider $2M+.
  • Bundle where possible: GL + E&O quoting from carriers like Hiscox or The Hartford can lower costs and simplify claims handling.
  • Maintain strong contracts and scopes of work: narrow, clear scopes reduce E&O exposure and clarify indemnities.
  • Ask carriers about duty to defend, allocation methodology, and history of allocation disputes.

Checklist: When to involve E&O vs GL in a claim

  • Allegation is about your advice, design, or deliverable → Notify E&O carrier immediately.
  • Injury or property damage at your premises, or caused by operations → Notify GL carrier.
  • Mixed allegations → Notify both GL and E&O carriers and your broker; document facts and contracts carefully.

Conclusion

For US-based professionals—whether in New York, Los Angeles, or Houston—the correct line of insurance depends on the nature of the alleged harm: financial loss from professional services → E&O; bodily injury or physical property damage → General Liability. Because real claims often mix elements, coordinate both policies proactively, confirm retroactive dates and tail options on E&O, and work with a broker to avoid coverage gaps or costly allocation fights.

External resources and further reading

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