Both coverages are types of liability insurance
1. The state of being responsible for something, especially by law.
Liability means being accountable for something, particularly by law. Liability insurance is what protects you in the event that someone holds you liable, or responsible, for a certain incident or outcome. Because defending yourself in court is not cheap, people buy liability insurance policies.
While we all like to believe that bad things only happen to bad people, unfortunate events sometimes happen to the best of us. And even if something is not your fault, you could still be held liable and have to defend yourself in court.
What’s the difference between professional and general liability insurance?
Both are liability insurance policies; they just cover different kinds of risks. And you might need one, or both, depending on what you do.
If you’re thinking that professional liability insurance covers incidents involving “professional” services and general liability insurance provides liability coverage in a more general sense, you’re on the right track.
Think of professional liability insurance (also called errors & omissions) as an insurance policy for people who make a living off their expertise. Whereas general liability insurance covers mishaps that can happen to any business owner, professional liability insurance covers the unique lawsuits that experts may face.
Professional Liability Insurance
Liability coverage that is specific to your professional work and services. Think “malpractice insurance” for different professions.
It covers you when a client is unhappy with your work because they feel they’ve suffered a loss.
Coverage includes costs and lawsuits arising from:
- Failure to deliver promised services
- Negligent professional services
- Mistakes, omissions, or incomplete/shoddy work
General Liability Insurance
Liability coverage for many of the things that can go wrong as a result of running a business, such as property damage or bodily injuries (to anyone who doesn’t work for you), and personal and advertising injury (copyright infringement, slander, libel).
- Bodily injuries and any associated medical expenses (clients, customers, and other people who do not work for you)
- Property damage
- Non-physical damage, such as libel, slander, and personal/advertising injury
Do both policies cover the same type of claims?
Even though both policies cover business liabilities, they don’t cover the same risks.
Here’s how they’re alike:
- Clients may require you to have one of these policies in order for you to work with them. (A carpenter might need a general liability policy to get hired, while a designer’s contract may require a professional liability policy.)
- They cover common (but different) risks that businesses face.
- They both help protect you from the financial fallout of getting sued: lawyer’s fees, court costs, and any settlements or judgements.
Here’s how they’re different:
They cover different types of risks. A general liability policy will help you if you spill your latte on your client’s new 3D printer. A professional liability policy will come in handy if your client loses money because of the work you did, or advice you offered.
Which liability policy is right for you?
You need general liability insurance if…
You run a business. Any business, regardless of size, can benefit from this policy. It becomes more important the more you interact with the public.
If you have a commercial property that welcomes visitors, it’s a must. But even if you work from home, it’s important to consider, because it covers your operations away from your premises.
You need professional liability insurance if…
You provide services or expert advice to clients for a living. If clients rely on your for your knowledge, skill, or expertise, they could suffer a great loss if you don’t deliver what you’ve promised.
It’s important to understand which liability policies you need so you have the right protection if something happens.