General Liability VS. Professional Liability Insurance
Small business owners often come across a question that is “what is the difference between general liability and professional liability insurance?” Having a clear concept of the differences and similarities between them help you make the best decision while matching the liability risks associated with your small business to individual coverage. Both the insurances offer protection against common small business liabilities but cover two different types of lawsuits. You may even need to opt for both the policies based on your risks.
By opting for general liability insurance, you make sure that you get coverage for all your business risks, its property, its employees and for those who come in touch with your business and employees. In addition to all these risks, professional liability insurance offers coverage that is more specific to some professions and scenarios.
In this blog, we will be sharing detailed information on both types of insurance policies to help better understand the two different concepts.
What is general liability insurance?
In simple words, general liability insurance offers protection to your company against the basic lawsuits that any business could come across. It is useful when a third party sues your business due to
- The damages you caused to their property
- Physical injuries
- Advertising injuries
What is professional liability insurance?
On the other hand, professional liability insurance, also known as errors and omissions insurance or malpractice insurance emphasizes particularly on lawsuits that stem from professional activities. Although this policy is mainly beneficial for service providers, many small business owners can also enjoy advantages from its coverage. It safeguards you from third-party lawsuits claiming you
- Were unable to keep contractual promises
- Delivered incomplete or poor quality work
- Offered negligent professional services
- Made errors or omissions
Similarities between general and professional liability insurance
Here are the similarities between general and professional liability insurance
- Both of the policies handle unavoidable liabilities: Unfortunately, small business owners are always at the risk for lawsuits. They also bear the burden of civil tort costs in this country. Your general liability and professional liability insurance policies together help you reduce your expenses in case you face any legal trouble due to accidents and oversights.
- Sometimes general contractors may require you to have your own general liability coverage. Similarly, your clients may also prefer to work with professionals who have valid professional liability coverage to address potential lawsuits.
Difference between general liability and professional liability
Here are the differences between general and professional liability
- Coverage of risk exposures
General liability insurance saves your business from lawsuits caused by a visitor slipping or falling on your commercial property. On the other hand, professional liability insurance protects you from higher expenses of alleged professional errors that result in a third-party financial loss.
- Coverage of damages
General liability offers coverage for physical damages whereas professional liability insurance covers financial losses. California general liability insurance coverage safeguards the insured person from legal actions against finished work that causes physical harm to someone. Although this comes under the domain of professional liability, physical damage is something that separates them from each other. Professional liability insurance is related to lawsuits taken over financial losses that are caused by someone’s products or services.
Which policy is suitable for your business?
If you rent or own a commercial property that is accessible to the public or you work in a professional services industry, you probably will need both the policies to shield your business from expensive and unexpected lawsuits.
Well, you can avoid either of them in some cases but it is not recommended to you as you never know when someone could have an accident in your building or blame you for not being able to fulfill the terms of a contract.
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