Commercial general liability (CGL) insurance generally covers claims involving third-party bodily injury or property damage arising from your business operations. Professional liability insurance, also called errors and omissions (E&O) insurance, covers certain claims arising from mistakes or negligence in the professional services you provide.
Depending on your business, you may need one or both types of insurance. This guide compares the coverage side by side, explains which Ontario businesses may need each policy and identifies important gaps to consider.
In This Article
- What commercial general liability insurance covers
- What professional liability (errors and omissions) insurance covers
- Professional liability vs general liability: side by side
- Which liability insurance does your Ontario business need?
- When you may not need professional liability insurance
- Gaps that neither general nor professional liability covers
- How to check what your current liability policy covers
- Frequently Asked Questions
Professional liability vs general liability: Side-by-side comparison
Commercial general liability and professional liability insurance protect against different types of claims. Here’s how they typically compare.
| Question | Commercial general liability (CGL) | Professional liability (E&O) |
| What does it cover? | Claims involving third-party bodily injury, property damage and certain personal or advertising injuries | Claims arising from errors, omissions or negligence in professional services |
| Who typically makes a claim? | Customers, visitors, other businesses or members of the public | Clients or others affected by professional services |
| What’s an example? | A customer trips over a cord in your shop and is injured | A client claims an error in your report caused a financial loss |
| How is coverage triggered? | Usually occurrence-based: the injury or damage happens during the policy period | Usually claims-made: the claim is first made during the coverage period, subject to reporting requirements and any retroactive date |
| Who may require coverage? | Landlords, general contractors, municipalities or event venues | Clients, professional associations or organizations awarding service contracts |
| What doesn’t it typically cover? | Professional negligence, damage to your own property or many cyber-related losses | General slip-and-fall claims, damage unrelated to professional services or many cyber-related losses |
The two policies often complement each other. Whether your business needs one or both depends on the services you provide, the risks involved and any contractual or professional insurance requirements.
What commercial general liability insurance covers
Commercial general liability (CGL) insurance helps protect your business against covered claims involving bodily injury or property damage to third parties. For example, a customer slips on a wet floor in your office, a contractor’s ladder falls onto a parked car, or your delivery team damages a customer’s flooring.
A typical CGL policy includes four main coverage areas:
- Bodily injury and property damage: Claims involving injuries to third parties or damage to their property caused by your business operations.
- Personal and advertising injury: Certain claims involving libel, slander or other covered offences.
- Medical payments: Limited medical expenses for certain accidental injuries, regardless of fault.
- Tenants’ legal liability: Certain damage to premises your business rents or occupies, where you’re legally responsible.
Most CGL policies are written on an occurrence basis. This means coverage generally depends on when the injury or damage occurred, rather than when the claim was made. A claim reported after the policy expires may still fall under the policy that was in force when the incident happened, subject to its terms and conditions.
For a closer look at these coverages, visit our commercial general liability insurance page. Our guide to CGL insurance costs in Ontario explains the factors that influence premiums.
What professional liability (errors and omissions) insurance covers
Professional liability insurance, also called errors and omissions (E&O) insurance, helps protect businesses against claims arising from mistakes, negligence or failures in their professional services. The Insurance Bureau of Canada identifies damages and legal defence costs arising from professional negligence, including inaccurate or incomplete advice, as potential areas of coverage.
These claims often involve financial losses. A bookkeeper misses a filing deadline, leaving a client with penalties. A software developer makes a coding error that takes a client’s online store offline. A marketing consultant publishes incorrect information in a client’s campaign, resulting in financial losses. These are examples of situations where professional liability coverage may apply, depending on the circumstances and policy wording.
Professional liability can also cover certain bodily injury or property damage claims arising from professional negligence. For example, some healthcare professionals carry coverage for claims involving injuries caused by errors in their professional services.
How claims-made professional liability coverage works
Most professional liability policies are written on a claims-made basis. This generally means the claim must be made while the policy is active and reported within the period required by the policy. The work giving rise to the claim must also fall within the policy’s retroactive date provisions.
If you let coverage lapse or switch insurers without preserving coverage for earlier work, you could lose protection against claims that arise later. When retiring or closing a business, an extended reporting period, often called tail coverage, may allow you to report claims involving past work after the policy ends.
Our professional liability insurance page explains these coverage considerations in more detail.
Which liability insurance does your Ontario business need?
The right coverage depends on your business activities, the services you provide and any insurance requirements in your contracts or professional regulations. Some businesses primarily face risks involving customers or property, while others may face claims arising from their advice or professional work.
| Type of business | Coverage to consider | Why it matters |
| Retail store or restaurant | CGL | Customer injuries, property damage and liability arising from business operations or products |
| Contractor or skilled trade | CGL; professional liability if providing design or other professional services | Damage or injuries from physical work, plus potential claims involving professional errors |
| IT consultant or software developer | Professional liability; CGL depending on operations or contracts | Software errors or faulty advice can cause client losses, while CGL addresses separate operational risks |
| Accountant, bookkeeper or management consultant | Professional liability; CGL depending on operations or contracts | Errors in professional services can cause financial losses, while leases or client contracts may require CGL |
| Registered massage therapist or private clinic | Professional liability; CGL for premises and operational risks | Claims arising from treatment or professional services, alongside separate risks involving visitors and premises |
| Marketing or design agency | Professional liability; CGL depending on operations or contracts | Claims involving professional errors, plus liability associated with client visits, events or other business activities |
When professional liability insurance may not be necessary
Not every business needs professional liability insurance. Retail shops, food trucks and cleaning companies that don’t provide professional advice or specialized consulting services may have greater exposure to the types of claims covered by commercial general liability insurance.
The key question is whether an error in your services could cause a client a loss and lead to a claim against your business. If your work involves advice, technical expertise, design or other professional services, E&O coverage deserves consideration, even if it isn’t required by law or contract.
Our guide to why businesses need professional liability insurance explains other situations where coverage may be worth considering.
Contractual and professional insurance requirements
Your contracts and professional obligations may determine which policies you need. Commercial leases often require CGL, while some clients require professional liability insurance before awarding work.
For Ottawa-area consultants pursuing federal government contracts, requirements vary by contract and procurement arrangement. Some require both CGL and professional liability insurance, including specified coverage limits. Review the insurance provisions in your lease and client contracts before choosing your coverage.
Certain regulated professions also have mandatory insurance requirements. For example, registered massage therapists holding a General Certificate of Registration in Ontario must maintain professional liability insurance.
What if you run your business from home?
Working from home doesn’t eliminate liability risks. A client visiting your home office could be injured, and mistakes in your professional services could still lead to claims.
Standard home insurance generally doesn’t cover business-related liability, although some insurers offer additional coverage or endorsements. Our home-based business insurance page explains the options available for businesses operating from home.
What general and professional liability insurance don’t cover
Even with both CGL and professional liability insurance, your business may have risks that require additional coverage. Common examples include:
- Cyber incidents and data breaches. CGL and professional liability policies may exclude or limit cyber-related losses. Cyber insurance can help address risks such as data breaches, ransomware and certain cyber-related financial losses.
- Your own business property. Damage to your office, equipment, tools or inventory generally requires commercial property insurance.
- Business vehicles. Vehicles owned or used for business may require commercial auto insurance, depending on the vehicle and its use.
- Workplace injuries. CGL doesn’t replace Workplace Safety and Insurance Board (WSIB) coverage where it’s mandatory for your Ontario business.
- Lost income after an interruption. Business interruption insurance can help replace lost income and cover certain ongoing expenses when an insured event, typically involving covered property damage, disrupts operations.
A small business insurance package may combine several types of coverage, including CGL and commercial property insurance. Our commercial insurance page provides more information about coverage options for Ontario businesses.
How to review your current liability insurance coverage
If you’re unsure whether your business has CGL, professional liability insurance or both, start by reviewing these documents:
- Policy declarations page: Check which types of coverage you have, the policy dates, limits and deductibles.
- Policy wording and endorsements: Review what each policy covers, its exclusions and any additional coverage or restrictions introduced by endorsements.
- Certificates of insurance: Check the coverage information you’ve provided to landlords or clients. A certificate summarizes insurance information but doesn’t replace the policy wording or establish your contractual requirements.
Pay particular attention to professional services exclusions in your CGL policy. If your business provides advice, design or other professional services, ask your broker whether claims arising from that work require separate professional liability coverage.
For claims-made professional liability insurance, check the retroactive date and the requirements for reporting claims. Changes in coverage or gaps between policies can affect protection for work completed in the past.
Your broker can help you review these documents, identify potential gaps and compare your existing coverage with the requirements in your lease or client contracts. Bring those agreements to the review so you can confirm whether your policies meet the applicable requirements.
Frequently Asked Questions
Is commercial general liability the same as professional liability?
No. Commercial general liability (CGL) insurance generally covers claims involving third-party bodily injury or property damage arising from your business operations. Professional liability insurance covers certain claims arising from mistakes or negligence in professional services. The policies address different risks, and some businesses benefit from carrying both.
Do I need both general liability and professional liability insurance?
You may need both if your business provides professional services and also faces risks involving customers, visitors or property. Consultants, IT firms, healthcare providers and design agencies are examples of businesses that may benefit from both. Your specific activities, professional obligations, lease and client contracts help determine which coverage you need.
Does general liability insurance cover professional errors?
Generally, CGL policies aren’t designed to cover claims arising from professional errors or negligence. Many contain professional services exclusions. Professional liability insurance is designed to address these risks, although coverage depends on the services insured and the policy wording.
Is professional liability the same as errors and omissions insurance?
Yes. Professional liability and errors and omissions (E&O) insurance generally refer to the same type of coverage. Both protect against certain claims involving errors, omissions or negligence in professional services. Some professions use different terms, such as malpractice insurance in healthcare.
What is the difference between claims-made and occurrence coverage?
Occurrence-based insurance generally covers incidents that happen during the policy period, even if a claim is made later. Claims-made insurance typically requires the claim to be made during the applicable coverage period and reported according to the policy’s requirements, subject to any retroactive date. CGL is usually occurrence-based, while professional liability is commonly claims-made.
Is professional liability insurance required for general contractors?
Professional liability insurance isn’t automatically required for every general contractor in Ontario. However, contractors who provide design, engineering or other professional services may need it, and some contracts require it regardless of the contractor’s usual insurance arrangements. CGL addresses different risks, including certain third-party injury and property damage claims.
Review your business liability coverage
Choosing between general liability and professional liability insurance starts with understanding the risks associated with your operations, the services you provide and your contractual obligations. Depending on your business, you may need one policy or both.
At Oegema, Nicholson & Associates, we’ve helped Ottawa-area businesses with their insurance needs since 1961. We can review your existing liability coverage, discuss potential gaps and help you compare options for your business. Contact us for a free consultation.
