Many Canadian consultants, IT firms and media operators still run their businesses on CGL alone, leaving their core professional exposures uninsured for years until a contract finally forces the issue, according to SWG’s Peter Kyung Min Kim (pictured).
Kim, senior professional lines underwriter at SWG, said the gap between what E&O policies cover and what CGL policies are designed to do remains poorly understood in parts of the market.
“Simply put, E&O is really to cover your financial loss from negligent acts, errors or omissions in the rendering of professional services., and it’s not about the bodily injury or the property damage,” he said. “That’s what you have in CGL.”
Most CGL wordings, he noted, exclude professional services as a matter of course. That leaves a blind spot for any business whose main exposure lies in advice or specialist services.
“Most Standard CGL policies will contain professional services exclusion,” he said. “So to close that gap, we offer the combined [E&O and CGL] whenever we can.”
Kim said he regularly sees submissions where the insured’s primary operation is clearly E&O‑driven, but only a liability program is in place.
“It remains common to encounter insureds whose primary exposure is professional liability but who carry only CGL. This is often due to contractual requirements rather than a comprehensive risk analysis,” he said.
Part of the problem, he suggested, is how CGL is first introduced. Many small businesses purchase it initially to satisfy lease requirements when taking office space. The label “commercial general liability” can also create a false sense of security.
“Often you purchase CGL because you’re leasing an office – it’s a lease requirement,” he said. “It sounds broad. When you say commercial general liability, it sounds to people intuitively like ‘general’ means I’m covered for everything. But if you are a consultant, your main exposure is the advice that you’re giving.”
Kim said his team now treats cross‑selling E&O as part of its duty of care rather than a pure sales exercise. When they see accounts where CGL alone is clearly not sufficient, they will proactively raise the issue with brokers.
“Just because a broker says no, you can’t just stop there,” he said. “You have to proactively communicate with your broker partners – for example, if you have a bookkeeper, IT consultant, or photographer, and all they have is CGL, this is an E&O-driven risk. This is what we can offer to close the gap in coverage.”
He added that SWG can provide stand‑alone E&O or combined E&O‑CGL programs, depending on broker and client appetite.
The exposure is not hypothetical. Kim pointed out that E&O policies are written on a claims‑made basis, and claims often lag the work that gives rise to them.
“E&O policies are written on a claims-made and reported basis, meaning coverage is triggered when a claim is made during the policy period, subject to a retroactive date. This differs fundamentally from occurrence-based CGL coverage,” he said. “It could be two, three years down the road, you are being sued for maybe the negligence or the work you’ve done in the past.”
If a firm has gone without E&O for years and then buys a policy without addressing retroactive coverage, historic work may never be picked up.
“If you don’t have the retroactive to cover the work that you’ve done in the past, essentially there’s no coverage,” he said.
Kim cited a range of classes where this pattern is common: consultants of various types, web and network designers, software developers and photographers, among others. In many cases, he said, these businesses have operated for five or 10 years before a contract finally requires E&O – often when dealing with a larger client.
Bookkeepers are another example. Where operations are entirely online, there may be almost no practical exposure to bodily injury or property damage, yet their advice and services can have significant financial consequences.
“Sometimes you could be running a bookkeeping business and it’s all done on an online basis,” he said. “Your exposure is essentially the advisory work you do, not bodily injury or property damage.”
Kim encouraged brokers to revisit long‑standing accounts in light of these dynamics, particularly where CGL was initially arranged for tenancy reasons. Identifying where advice, design or specialist services are central to the client’s proposition – and then building combined E&O‑CGL solutions with appropriate retroactive dates – can prevent painful coverage gaps when a delayed claim finally materialises.
“Whenever there’s an opportunity, I always try to work with the broker to identify gaps and protect the client,” he said. “While it may be perceived as cross-selling, recommending E&O alongside CGL is fundamentally about aligning coverage with operational exposure and preventing uninsured loss scenarios to protect clients and their best interests.”
