General liability vs professional liability

The U.S. Small Business Administration draws the line in one sentence each. General liability “protects against financial loss as the result of bodily injury, property damage” and the lawsuits that follow. Professional liability “protects against financial loss as a result of malpractice, errors, and negligence.”

On a jobsite that comes down to cause. A worker from another trade trips over your hose and breaks a wrist: that is bodily injury, and it belongs to your general liability policy. You sized the rooftop units on a design-build job, the building cannot hold temperature, and the owner sues for new equipment and a summer of lost rent. Nobody was hurt and nothing was damaged by accident. That is a professional claim, and a CGL was never meant to answer it.

A contractor’s CGL is often issued with an endorsement that takes injury or damage arising from professional services back out of cover: preparing or approving drawings, specifications, surveys and engineering. Some versions carve back construction means and methods, so ordinary site decisions stay covered. Others do not.

The result is a gap, not an overlap. When your design causes physical damage, the CGL may point at the exclusion and the professional policy, if you have one, pays. If you do not, the gap is yours.

A trade contractor who builds strictly to someone else’s stamped drawings has little professional exposure, and general liability is the policy that matters. The picture changes the moment you design, specify or advise. The federal acquisition rules define design-build as “combining design and construction in a single contract with one contractor”, and that single contract is the whole point: the design risk travels with it.

• Design-build firms

  One contract covers design and construction, so a design error is your error. The owner has nobody else to sue.

• Construction managers

  Scheduling, estimating, value engineering and constructability reviews are advice. Advice that costs the owner money is a professional claim, not an accident.

• Contractors with engineers or architects on staff

  Stamped calculations, shoring and temporary-works designs, and delegated design (trusses, sprinklers, curtain wall) are professional services however they are invoiced.

• Energy auditors and commissioning agents

  The product is a recommendation. If the retrofit never delivers the savings you modelled, the loss is financial, and no CGL was written for that.

Contractors who subcontract all design to an outside engineer still carry some of it. The owner holds the design-builder responsible; you then look to the engineer’s own policy. Ask for that engineer’s certificate the same way you would ask a sub for their GL, and check its limits against what your contract promised the owner.

Contractor GL is normally written on an occurrence form. Professional liability usually is not: it is written claims-made, so the policy that responds is the one in force when the claim arrives, and only for work done after the policy’s retroactive date.

Two habits protect you. Never let the retro date move when you renew or switch carriers, and price tail cover before you close or sell the business, because a design defect can surface years after handover. The mechanics are laid out in occurrence vs claims-made policies.

On federal design work the liability is written into the contract. FAR clause 52.236-23 makes an architect-engineer contractor “responsible for the professional quality, technical accuracy, and the coordination of all designs, drawings, specifications, and other services”, and keeps it liable for damage caused by negligent performance even after the government has approved and paid for the work. FAR 36.608 directs the contracting officer to consider recovering construction costs caused by design errors from the firm that made them.

Private owners write the same idea into design-build agreements as a professional liability limit, often with a requirement to keep the policy in force for years after completion. That requirement shows up on the certificate the owner asks for; our certificate guide shows where to look, and the COI request sheet lets you list a professional line for your agent.

GL premium follows payroll, receipts and the class of work, which is why our GL calculator asks for those three. Professional liability is underwritten on different questions: how much of your revenue is design or advisory fees, what kind of projects, the limit, the retro date and your claims history. A firm that does a little delegated design can often add a modest professional line; a design-build firm with an in-house engineering team is a professional risk first.

We do not print PL premium figures because no primary source publishes them. For where each line of cover sits in a contractor’s budget, see what contractor insurance costs, and for the policy people most often confuse with GL, see surety bond vs general liability.