Does general liability insurance cover professional mistakes?

Complete Guide to General Liability Insurance and Professional Mistakes

Why This Question Matters for Colorado and Utah Residents

Understanding what your general liability insurance covers—and what it doesn’t—can mean the difference between financial security and costly out-of-pocket risks for local businesses. In Colorado and Utah, the right protection is not just about compliance; it’s about surviving unexpected lawsuits in an environment where legal costs and claim settlements can bankrupt even successful operations.

• Industry-specific legal exposure: Colorado and Utah businesses face increasing claims, especially as professional services expand across tech, construction, and retail sectors.
• High legal costs: Defense costs for liability lawsuits in the mountain region routinely top $50,000—even for claims that are dismissed without a payout.
• Local contract requirements: Many municipalities (e.g., Larimer County, CO) and clients require proof of the correct insurance policies for bid approvals and ongoing projects.

What Most People Get Wrong

A common misconception is that general liability covers all types of business risks. Many in Colorado and Utah mistakenly believe their GL policy protects them from claims related to professional advice, errors, or design work. Unfortunately, these exposures require a dedicated professional liability (errors and omissions) policy. Another misconception is assuming “being careful” means insurance is unnecessary until required by a contract—yet claims data shows even experienced professionals are sued for alleged mistakes.

The Complete Picture

General liability insurance is designed to cover bodily injury (e.g., slip and fall), property damage, and certain personal/advertising injury claims—but it excludes professional negligence, advice, or service mistakes. For example, a plumber in Fort Collins is covered if a customer slips in their shop, but not if their plumbing design causes extensive mold damage in a client’s home. That second scenario requires professional liability coverage.

In Colorado and Utah, professional liability claims can lead to defense costs exceeding $227,000 according to regional risk analytics. Without the right policy, these expenses fall directly on the business owner. Furthermore, many contracts and public jobs (especially in Larimer and Weld counties) mandate proof of both GL and professional liability insurance for licensing and project eligibility. As businesses grow or offer more specialized services, the distinction between the two policies becomes essential to protecting assets and reputation.

Making the Right Decision for Colorado and Utah Residents

Question 1: Does my business risk include giving professional advice or specialized services?

Consider:

• Do you design, consult, or make expert recommendations as part of your business?
• Would a mistake or oversight in your work—even if unintentional—impact your client’s outcome or finances?

If you answer yes, you need both general liability and professional liability coverage.

Question 2: What does my contract (or client) require?

Many Colorado and Utah contracts specify minimum GL limits ($1M per occurrence common in CO) and often require professional liability for participation. Always review bid documents and consult a local specialist before signing.

Question 3: What’s the real cost of being uninsured for professional mistakes?

Without proper coverage, the typical professional liability lawsuit can cost over $227,000 to defend in Colorado—enough to close 74% of businesses facing large claims. Ensuring you have both policies is crucial as your operation grows and takes on new projects.