What’s the difference between general and professional liability insurance?
The difference between general liability and professional liability insurance is a common question for business owners. These insurances cover different risks: general liability is for claims based on third-party property damage and bodily injury. In contrast, professional liability insurance covers errors or oversights that result in third-party financial losses. Here’s a breakdown of these two types of business insurance and if you should consider getting both.
What does general liability insurance covers?
General liability insurance protects your business if you or your employees are accused of causing property damage, bodily injury, or reputational harm to someone who isn’t affiliated with your business. These policies can cover legal and settlement costs in cases like:
- A customer trips & falls at your business location and suffers an injury.
- An employee backs into a customer’s car while making a delivery.
- A competing business accuses you of copyright infringement.
What does professional liability insurance covers?
Professional liability insurance, known in many industries as errors and omissions insurance, protects your business against lawsuits filed by dissatisfied customers who hold you responsible for their losses. Professional liability insurance policies protect against claims like:
- Inadequate or inaccurate work.
- Advice that a customer deemed as “bad advice.”
- Missed deadlines or incomplete work.
Which Should I Have for My Business?
What type of insurance coverage you have will depend on your business – the field it’s in its size, its location and what you sell or provide. In many cases, having both policies in place is a smart idea as they can often work in tandem to help get you through a potentially costly situation. Even if the accusation is unfounded, you may have to front large amounts of money for the legal proceedings. If you’re unsure what policies you should have, we recommend you talk to a qualified business insurance advisor who can help you navigate the available options.
How to shop for general and professional liability insurance.
Most business / commercial insurance providers offer both general liability and professional liability insurance, but they usually aren’t offered as a package. General liability insurance is sold on its own or as part of a business insurance policy, which can also include commercial property insurance and may include business interruption insurance. Professional liability insurance is typically purchased as a separate policy.