Most businesses understand the essential need to protect against claims and lawsuits. However, it can be challenging to determine what type of insurance will best protect against common threats.
Professional liability insurance and general liability insurance are often carried by businesses that want to protect their investment against costly liabilities.
While there are some similarities between these policies, they actually cover different types of lawsuits. Depending on their unique risks, a business may choose one or both policies.
What Is Professional Liability Insurance?
Professional liability insurance, otherwise known as errors and omissions (E&O) insurance protects businesses against lawsuits and other legal claims resulting from professional services provided to customers.
With professional liability insurance, businesses can safeguard against losses from errors, omissions, and negligence in the performance of a professional service.
This type of coverage can help many professionals, such as accountants, lawyers, real estate professionals, design professionals and more. Any business that offers professional advice or services to customers can benefit from acquiring a professional liability insurance policy.
What Does Professional Liability Insurance Cover?
While every business owner strives to run their business as well as possible, mistakes do happen. When a business error results in a financial loss for a client or customer, it can lead to a claim or lawsuit. Professional liability policies can help cover the following:
- Negligent acts
- Inadequate work
- Incomplete work
- Missed deadlines
- Misrepresentation
- Inaccurate advice
A policy can also cover any legal fees and settlement expenses that may accumulate during legal proceedings.
What Is General Liability Insurance?
General liability (GL) insurance is one of the most important policies that a business can carry. This type of coverage is intended to protect against claims relating to personal injuries, property damage, and advertising injuries that arise from business operations, premises, or products.
General liability insurance can help preserve a business’s assets by covering damages, settlements, and other legal costs up to the limit on the insurance policy for covered claims. Although general liability insurance is not always required by law, nearly every type of business can benefit from this type of policy.
What Does General Liability Insurance Cover?
With a general liability insurance policy, businesses can protect against the financial fallout of claims that involve bodily injuries or property damage. This type of policy can help cover attorney fees and medical expenses for which a business may be legally responsible.
General liability insurance may also cover a business owner if found liable for damage to their landlord’s property. However, general liability does not cover all liability issues. For example, a policy will not cover employee injuries, punitive damages, professional mistakes, intentional acts, or workmanship.
How are Professional and General Liability Similar?
It is important to recognize the similarities between professional and general liability insurance when choosing policies to protect a business. Both types of insurance policies are designed to protect against business liabilities. Businesses can count on professional and general liability coverage to minimize the financial impact of a liability claim.
Professional liability and general liability policies can help business owners meet their contractual obligations. Some landlords or clients may require a business owner to carry a specific amount of professional liability or general liability insurance before they can enter into a contract.
How are Professional and General Liability Different?
While professional and general liability insurance policies are similar in several ways, there are also some distinct differences. These differences pertain to the types of risks that each policy covers.
Professional liability insurance protects businesses against lawsuits from clients claiming negligence, inaccurate advice or misrepresentation.
This type of coverage usually relates to financial losses rather than property damage or physical injuries. General liability policies, on the other hand, protect against damage to property or injury to people that arise from a business’s daily operations.
Which Policy Makes Sense for Your Business?
Protecting against common liabilities is essential for every business. In most cases, a business owner will require professional and general liability insurance to adequately protect their company from the significant cost of unexpected claims and lawsuits.
This is especially true for businesses that offer professional services or professional advice. Most businesses start by acquiring a standard general liability insurance policy that protects against common business risks.
Some business owners may also be required to carry GL insurance due to a contractual agreement with a commercial landlord. However, general liability coverage does not protect against claims of professional errors, making professional liability coverage a must-have.
Get the Right Coverage with Help from Atlas
Both professional and general liability insurance are important policies that protect against different types of risks. For more information or to speak with an experienced insurance agent about your policy options, reach out to Atlas Insurance Agency at (808) 400-6634 or request an insurance quote online today.