Your CGL Is Cheap—But It Won't Save Your Business

Here's a contrarian take: your $1 million general liability policy is a bargain—and that's exactly why it's dangerous. It lulls you into thinking you're covered. You're not. Not for the claims that actually kill businesses.

The Cheap Policy That Costs You Everything

General liability insurance averages about $810 a year from The Hartford. That's $67 a month. Compare that to professional liability: average minimum monthly premiums start at $38 for healthcare professionals and $62 for miscellaneous standalone coverage. For architects and engineers, it's $239 a month. For tech companies, $146.

So yes, CGL is cheaper. But here's the kicker: general liability covers bodily injury and property damage. It does not cover financial losses from your professional mistakes. That's what errors and omissions (E&O) insurance is for. And E&O claims are the ones that can wipe you out.

Think about a client who sues you for bad advice that cost them $500,000. Your CGL won't pay a dime. Your E&O will, if you have it. The Hartford notes that E&O can cover attorney fees, which average $3,000 to $150,000, and settlements ranging from a couple thousand to millions. Without E&O, that's all out of pocket.

Why E&O Costs More—And Why It's Worth It

E&O is more expensive because it covers a different kind of risk: abstract, financial, and often catastrophic. General liability covers physical risks like a slip and fall. Professional liability covers errors and omissions in the services you provide. The Hartford recommends carrying both for full protection.

But here's where it gets tricky: professional liability is usually written on a claims-made basis. That means you're only covered for claims made during the policy period, and only for incidents that happen after the retroactive date. If you cancel the policy, you lose coverage for future claims unless you buy an extended reporting period—typically 30 to 60 days, but you can extend it for a year or more for an additional cost. This is a hidden cost many business owners don't budget for.

Contrast that with general liability, which is occurrence-based. If the incident happens during the policy period, you're covered even if the claim comes years later. That's why CGL feels safer. But it's not.

The Counter-Argument: "I've Never Been Sued"

You might think, "I've never been sued, so why pay for E&O?" Fair question. But consider the data: nearly 29% of physicians had been sued by 2024, down from 34% in 2016. And among older physicians, it's much worse—45.2% of those aged 55 and over had been sued. For obstetricians and gynecologists, it's 59.6%. General surgeons? 53.1%. These aren't rare events. They're career risks.

And medical liability premiums are rising. In 2025, 36 states saw at least one premium increase, and 18 states had at least half of their reported premiums rise. The share of premiums that increased year-over-year jumped from 13.7% in 2018 to 39.9% in 2025. So the cost of coverage is going up, but the cost of being uninsured is worse.

The Smart Play: Buy Both, But Don't Overpay

Here's my recommendation: don't choose between CGL and E&O. Buy both. But be smart about limits and bundling.

Most client contracts require at least $1 million in general liability. That's standard. But your E&O limits should match your risk. Professional liability limits commonly start at $1 million per claim, with higher limits of $2 million to $5 million or more for larger projects. The right limit depends on the size of the claims you could face.

If you want to save money, consider a Business Owner's Policy (BOP), which bundles general liability and property insurance. The Hartford's average BOP premium is $1,687 a year. That's cheaper than buying separate policies. But a BOP does not include professional liability. You'll need to add E&O separately.

And don't forget umbrella insurance. Commercial umbrella extends the limits of your general liability and other underlying policies. It's not a substitute for E&O—it's a layer on top. Umbrella limits range from $1 million to $15 million. But you can't get umbrella without an underlying policy, and it won't cover professional liability claims.

One more thing: when you buy E&O, watch the retroactive date. If you switch carriers, you might lose coverage for past incidents. And if you cancel, you might need an extended reporting period. That's a cost many ignore.

The Bottom Line

Your cheap CGL is a false economy. The real risk is a professional liability claim. Buy E&O, set limits that match your exposure, and factor in the claims-made quirks. It's not about being paranoid—it's about being solvent. A $1 million CGL won't save you when a client sues for bad advice. But E&O will.

Sources

• IRMI - https://www.irmi.com/articles/expert-commentary/contractors-professional-liability-and-the-cgl
• The Hartford (General Liability) - https://www.thehartford.com/general-liability-insurance
• The Hartford (Professional Liability) - https://www.thehartford.com/professional-liability-insurance
• The Hartford (Errors & Omissions) - https://www.thehartford.com/business-insurance/errors-omissions-insurance
• Insurance Journal - https://www.insurancejournal.com/news/national/2026/04/29/867519.htm