General Liability vs Professional Liability vs Cyber Insurance: The Small-Business Playbook

Three policies, three starting prices, three different harms. Hiscox advertises general liability from $30 a month, professional liability from $23 a month, and cyber insurance from $30 a month. Insureon's marketplace data on 100,000 small businesses puts the average general liability premium at $45 a month, with annual premiums ranging from $265 to $3,030. The cheapest correct stack at Hiscox's starting prices is $83 a month — $996 a year — for all three. The most expensive worked example Hiscox publishes is $528.87 a month for a home health aide in Texas. The gap between those two numbers is the whole subject of this playbook: starting prices are floors, not quotes, and the policy you skip is the one that decides whether a claim is an inconvenience or a business-ending event.

This playbook is for a founder buying their first commercial insurance, a B2B consultant or agency deciding whether professional liability is worth a second premium, and any SaaS founder who holds customer data and has never priced cyber cover. It is not a substitute for a licensed broker's quote, and no premium in this guide is a quote for your business.

The decision in one table

General liability: the foundation, and its three parts

General liability — commercial general liability, or CGL — is the foundational commercial third-party liability policy. It is the first policy an LLC buys. The Insurance Information Institute frames it as the policy virtually every business needs, and it responds to three categories of third-party claims: bodily injury, property damage, and personal and advertising injury. A customer who slips on wet flooring in your office, an employee who damages a client's property while working, and an advertising claim of libel or copyright infringement are the three classic shapes.

What it costs is a distribution, not a number. Insureon's data: an average of $45 a month, with 22 percent of small businesses paying less than $30 a month and 41 percent paying between $30 and $60 a month. That leaves 37 percent paying more than $60 a month.

The average is $540 a year. The range is $265 to $3,030 a year. Industry moves the number more than anything else: Insureon puts a coffee shop at $47 a month and a home-office IT consultant at $32 a month. State matters too — California $42, Florida $55, New York $44, Texas $43 a month on Insureon's state table. Hiscox's $30 starting price sits below the $45 market average, which is why it is a floor and not a benchmark.

Professional liability: the policy for the harm you can cause without touching anyone

Professional liability — errors and omissions, E&O — exists because a business can harm a client financially even when nobody is physically injured and no property is damaged. The Insurance Information Institute lists the claims general liability does not cover but professional liability does: negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. The professions it names are accountants, architects, engineers, graphic designers, IT consultants, insurance professionals, investment advisors, management consultants, real estate agents and brokers, and software developers. If your work product is advice, design, code, or a recommendation, your exposure lives here.

Two mechanics decide whether the policy actually pays. First, most professional liability policies are claims-made: the policy must be in effect both when the event took place and when the lawsuit is filed. Change careers or retire without tail coverage and a claim filed after the policy lapses is uncovered, even though the work happened while you were insured. An occurrence policy covers any claim for an event that took place during the period of coverage, even if the suit is filed after the policy lapses. Second, the deductible: the Insurance Information Institute puts professional liability deductibles generally between $1,000 and $25,000. A $25,000 deductible on a $30,000 claim means the policy pays $5,000 — the deductible is the real price of the policy, not the premium.

Cyber: the $30 policy that covers the claim the other two exclude

Cyber insurance covers losses from a data breach, a security failure, or an extortion threat — the events general liability explicitly excludes. A breach that exposes customer data can trigger notification duties under the CCPA or the GDPR, and the policy's breach-response cover is what pays for the notifications. If you process card payments, a breach can also put your PCI-DSS compliance in scope. Hiscox sells it as a standalone policy from $30 a month. The worked examples on Hiscox's cost page all price a $250,000 cyber limit with a $10,000 deductible: $33.90 a month for the home health aide, $26.91 for the personal trainer, $29.57 for the photographer. Note the trainer's cyber premium is below the $30 starting price — starting prices are illustrative floors, and a low-risk profile can quote under them.

The $10,000 deductible is the number to stare at. On a $250,000 limit, the deductible is 4 percent of the limit — and on a small breach that costs $12,000 to contain, the policy pays $2,000 and you pay $10,000. Cyber cover is not a substitute for backups, patching, and access control; it is the balance-sheet backstop for the breach that gets past them.

The premium math: three Hiscox examples, checked line by line

Hiscox publishes three worked examples with exact premiums. All three are worth reading as a set, because they show how far real quotes sit from starting prices.

Check the arithmetic. The aide: $324.37 plus $170.60 plus $33.90 equals $528.87, and $528.87 times 12 equals $6,346.44 a year. The trainer: $33.32 plus $81.97 plus $26.91 equals $142.20, or $1,706.40 a year. The photographer: $50.40 plus $75.30 plus $29.57 equals $155.27, or $1,863.24 a year. The aide's general liability premium alone — $324.37 a month — is more than ten times the $30 starting price, because a home health aide visits clients' homes and the exposure is bodily injury in someone else's house. The trainer's general liability is $33.32, barely above the floor, because the risk is a controlled gym. Same policy, same carrier, same limits: a tenfold difference driven by what the business actually does.

The photographer's row carries a second lesson: the business owner's policy. A BOP bundles general liability with commercial property, and Hiscox prices it from $42 a month — $12 a month more than standalone general liability at $30. The photographer's BOP is $50.40, which buys the GL cover plus $25,000 of business property with a $1,000 deductible. But the Insurance Information Institute is explicit: professional liability coverage is not included in an in-home business policy or a business owner's policy. A founder who buys a BOP and assumes they are covered for professional mistakes has bought the wrong policy for the wrong risk.

The deductible break-even: when a higher deductible is worth it

A deductible is the amount you pay before the policy pays anything, and raising it lowers the premium. Whether the trade is worth it is a piece of arithmetic, not a feeling. The expected annual cost of a policy is the premium plus the probability of a claim times the deductible. Take the cyber example: a $10,000 deductible against a $500 deductible is $9,500 of extra out-of-pocket on a claim. If the chance of a claim in a given year is 5 percent — one claim in twenty years, an assumption you should replace with your broker's number — the expected extra cost is $475 a year.

If raising the deductible saves more than $475 a year in premium, take the higher deductible and bank the difference. If it saves less, keep the lower deductible. The same formula prices the professional liability deductible range the Institute publishes, $1,000 to $25,000: at a 5 percent claim probability, the expected cost of the $25,000 deductible over the $1,000 deductible is $1,200 a year — $24,000 times 5 percent — which means the premium saving has to clear $1,200 a year before the high deductible earns its keep. Do this calculation with your actual premium quotes and your broker's claim-frequency estimate, not with the 5 percent used here.

What neither policy covers, and what to buy instead

The gaps are a shopping list. Employee injuries belong to workers' compensation, which most states require by law once you have employees. Damage to your own property belongs to commercial property cover, usually inside a BOP. Auto accidents belong to commercial auto. Professional mistakes belong to professional liability. Cyber events belong to cyber. Intentional or dishonest acts are excluded from professional liability entirely — no policy in this guide covers a founder who meant to cause the harm.

Limits deserve the same discipline as deductibles. The Hiscox examples use a $1,000,000 general liability limit and a $1,000,000 professional liability limit, with a $250,000 cyber limit. A $1,000,000 limit is the default ask on most client contracts and vendor agreements. If your largest client contract requires $2,000,000, the $1,000,000 policy fails the contract even though it passes your own risk judgment — check the contract before you buy, not after the claim.

The execution checklist

1. List the harms your business can actually cause: bodily injury or property damage, financial loss from your work, and a data breach — and assign one policy to each harm.
2. Get quotes for general liability, professional liability, and cyber together, with the same limits on each quote so the premiums are comparable — and have your EIN, revenue, and headcount ready, because the quote depends on all three.
3. Read the deductible on each quote and run the break-even formula above against your broker's claim-frequency estimate.
4. Confirm the professional liability form in writing: claims-made or occurrence, and the price of tail coverage if it is claims-made.
5. Check your largest client contract for the limit it requires, and buy to the contract, not to your comfort level. Ask your CPA whether the premiums are deductible for your entity.
6. If you buy a BOP, confirm in writing that professional liability is a separate policy — it is not inside the BOP.
7. Calendar the renewal and the claims-made retroactive date; a lapsed professional liability policy with no tail is a coverage gap that only shows up when a claim arrives.

Three policies, $83 a month at the starting prices, $996 a year. The founder who buys all three is not over-insured — they are insured against the three different ways a business can be sued, and each policy covers a harm the other two exclude by design. The founder who buys one and assumes it covers everything has bought a certificate, not coverage. The certificate is what the landlord frames. The coverage is what pays the claim. Buy the coverage. The decision companions carry the rest: our contractor classification playbook for the workers whose status decides which policies you need, our equipment financing playbook for the financed assets your limits must cover, and our Section 179 depreciation playbook for the equipment you insure and depreciate. Price the deductible decision with our break-even calculator before you sign.