When it comes to protecting your business, liability insurance is a must. But which is right for your needs? The two common types of liability insurance are general and professional liability insurance. While both types of insurance offer protection, they differ in the types of risks they cover. Let’s take a closer look between the two and discuss how they can protect you.
What Is General Liability Insurance?
General liability insurance is the most basic kind of business insurance that every business owner should have to protect themselves. It provides coverage for accidents or injuries on your business property and damages caused by your products or services. It also covers legal fees, medical expenses, and settlements awarded to the injured party. Here are a few scenarios general liability insurance would typically cover:
- A customer slips and falls on your store’s wet floor and breaks their arm. A general liability policy could cover the customer’s medical expenses.
- A contractor remodels a bathroom when a worker accidentally breaks a large window. The contractor’s general liability policy could cover replacing the customer’s window.
- A competing business accuses you of copyrighting its product design and takes you to court. A general liability policy could cover legal fees and judgments against you.
What Is Professional Liability Insurance?
Professional liability insurance, also called errors and omissions (E&O), helps protects business owners from negligence or error claims related to their professional service or advice. Its coverage focuses specifically on lawsuits that stem from your professional duties. These third-party lawsuits are among the most expensive lawsuits business owners can face. Professional liability insurance helps cover legal fees, settlements, and compensatory damages. Here are some scenarios professional liability insurance would typically cover:
- As a bookkeeper, you made a clerical mistake that costs your client thousands of dollars, penalties, and late fees.
- A patient sues you for malpractice after a surgical procedure goes wrong due to an error on your part.
- An architectural firm you own completes a project 8 months behind schedule. Your client accuses you of breaching your contract resulting in expensive project delays.
Who Needs Professional Liability Insurance?
If your business offers professional services or advice to customers, you’ll need professional liability insurance to protect yourself. Some of the specialists who should consider getting this insurance are:
- Architects, designers, and engineers
- Financial consultants
- Accountants and bookkeepers
- Marketing and advertising professionals
- Beauty consultants
- Doctors, nurses, and physicians
Do You Need Both Types of Coverage?
General liability insurance is not required by law. However, most states require you to have general liability insurance when applying for specific licensing types. In addition, if your business has a physical location, many commercial landlords require their tenants to carry general liability insurance. It’s important to understand that general liability insurance does not provide coverage for claims of professional mistakes or erroneous advice. That is why having a professional liability policy helps fill in those gaps. Depending on your business and the types of risks you face, both of these insurance policies may be necessary to protect you and your business.
How To Shop For General and Professional Liability Insurance
General liability and professional liability insurance usually aren’t offered as a package. General liability insurance is often sold on its own or as part of a business owner’s policy, which also includes commercial property insurance and business interruption insurance. Professional liability insurance is not included in a business owner’s policy and must be purchased as a separate policy. At AIS Insurance, we can help you find the lowest rates and best coverage for your needs. Speak with one of our Commercial Insurance Specialists today at (855) 919-4247 for a quick and easy free quote.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may differ from those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
