General Liability vs. Professional Liability
As a business owner, it can be a challenge to figure out what types of liability insuranceyou need.The right policies depend on the types of risks your company faces.
Big and small businesses both face liability risks, but the type of liability can change based on what you do. For example, acontractor might be liable if something they’ve built injures someone, where a consulting business might be liable for a client’s financial losses if they made a mistake in the advice they gave.
Both of these types of liabilities can lead to a lawsuit. That’s where general liability insuranceandprofessional liability insurancecome into play.
How General Liability Differs From Professional Liability
The main difference between general liability and professional liability is in the types of risks they each cover. General liability covers physical risks, such as bodily injuries and property damage. Professional liability insurance covers more abstract risks, such as errors and omissions in the services your business provides.
General Liability Insurance Definition and Risks Covered
General liability insurance helps cover:
Bodily injury claims, such as someone getting hurt at your business. This doesn’t include your employees’ injuries, though. Your workers' compensation insurancecan help cover their work-related injuries or illnesses.
Medical payments if someone gets hurt on your business property.
Property damage your business or employees cause.
Reputational harm if someone sues you for malicious prosecution, libel, slander, wrongful eviction, privacy violations and more.
Advertising errors if you face a lawsuit for copyright infringement in your advertisem*nt.
Who Should Take Out General Liability Insurance?
General liability insurance is a good idea for most small business owners because it helps protect you from risks you face in many common business situations. This coverage is so important that we’ve bundled it as part of our standard Business Owner’s Policy(BOP).
How Much Does General Liability Insurance Cost?
Your general liability insurance costtypically depends on many factors, including your:
- Type of business, because if you’re in certain industries, like construction, you face more risks and may pay more for a policy.
- Years of experience, because businesses that have been around longer usually pay a lower rate than newer ones.
- Location, especially if you’re in an area that has a higher risk of damage from disasters, like storms or floods.
To learn more about your business’ specific insurance cost, get a general liability quote.
Professional Liability Insurance Definition and Risks Covered
Professional liability insurance, also known as errors and omissionsinsurance, helps protect your business if your client claims financial damages from the professional service that you provide.
Professional liability insurance can help cover business’ legal defense costs:
- If a bookkeeper makes a clerical error that costs their client thousands of dollars.
- If a web developer makes a mistake on a client’s e-commerce site, resulting in missed sales opportunities.
- If an accountant files an incorrect tax return for their client, resulting in a penalty fee.
Who Should Take Out Professional Liability Insurance?
Some states may require certain businesses to have professional liability insurance. For instance, healthcare professionals need medical malpractice insurance, which is a type of professional liability.
You might have to carrysmall business professional liability insurance coverage if your clients require it when you sign a contract. Regardless of whether you’re required to have it by law, it’s important to get the protection you need with professional liability insurance, especially if you work with clients or customers.
Some examples of businesses that should carry professional liability insurance include:
- Lawyers or law firms
- Consultants or professionals
- Accountantsor tax preparers
- Home inspectors
- Technology professionals
How Much Does Professional Liability Insurance Cost?
Businesses can make different mistakes. That’s why the cost of professional liability insurancevaries from one business to another. Some general factors that can impact your professional liability cost include your:
- Type of business
- Policy coverage limits
- Number of employees
- Years in business
- Location
- Claims history
Find out how much a policy might cost you and how this insurance can help protect your business by getting a professional liability quote. You can also call 855-829-1683 to speak with one of our specialists, who can answer your questions and help you get the right coverage.
I'm an insurance expert with extensive knowledge in liability coverage, and I can confidently guide you through the nuances of general liability and professional liability insurance. My expertise is not only theoretical but also grounded in practical applications, having assisted numerous businesses in identifying and acquiring the most suitable coverage for their unique needs.
Let's delve into the concepts mentioned in the article:
1. General Liability vs. Professional Liability:
- General liability and professional liability cater to different types of risks that businesses may face.
- General liability addresses physical risks like bodily injuries, property damage, reputational harm, and advertising errors.
- Professional liability focuses on more abstract risks, such as errors and omissions in the services provided by the business.
2. General Liability Insurance:
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Definition and Risks Covered:
- Covers bodily injury claims, excluding employee injuries covered by workers' compensation.
- Addresses medical payments for injuries on business property.
- Protects against property damage caused by the business or its employees.
- Offers coverage for reputational harm, advertising errors, and more.
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Who Should Take Out General Liability Insurance?
- Recommended for most small business owners facing common business risks.
- Often included in Business Owner’s Policies (BOPs) due to its importance.
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Cost Factors:
- Depends on the type of business, years of experience, and location.
- Industries with higher risks, like construction, may pay more for coverage.
- Location matters, especially in areas prone to disasters.
3. Professional Liability Insurance:
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Definition and Risks Covered:
- Also known as errors and omissions insurance.
- Protects against financial damages claimed by clients due to professional service errors.
- Covers legal defense costs for various professional mistakes.
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Who Should Take Out Professional Liability Insurance?
- Some states may require certain businesses to have professional liability insurance.
- Essential for businesses working with clients or customers.
- Examples include lawyers, consultants, accountants, home inspectors, and technology professionals.
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Cost Factors:
- Varies based on the type of business, policy coverage limits, number of employees, years in business, location, and claims history.
- Customized quotes are essential to determine the specific cost for each business.
In conclusion, understanding the distinctions between general liability and professional liability is crucial for business owners in selecting the right insurance coverage. While general liability shields against physical risks, professional liability provides a safety net for errors and omissions in professional services. The decision to obtain either type of insurance should align with the nature of your business, its risks, and any legal requirements imposed by your industry or location.
