Liability insurance is one of the most important types of insurance policies you should purchase as a business owner. But when it comes to general liability insurance vs. professional liability insurance, it may seem a bit confusing as to which is the right policy for your business.
While both policies are designed to protect businesses, understanding the differences between them is crucial to ensure that your business has the right coverage in place.
In this post, we’ll take a closer look at the differences between general liability insurance and professional liability insurance to help you better determine which option may be best for your business. In the final analysis, your business may need both.
What Is General Liability Insurance?
General liability insurance is a policy that covers your business for accidents and injuries that may occur on your premises or as a result of your products or services.
This policy primarily covers third-party claims, including bodily injury, property damage, and personal injury. For example, if a customer slips and falls in your store or office, general liability insurance can help cover any medical costs or legal expenses that may arise from the incident.
In short, general liability insurance offers coverage for claims alleging that your business caused physical damage or property damage to someone else.
What Is Professional Liability Insurance?
Professional liability insurance, also known as errors and omissions insurance, provides coverage for claims that may arise from errors or mistakes made while performing professional services.
This policy covers legal fees, settlements, and judgments that may arise from damages caused by your business’s services.
For example, if a client sues you for damages because they believe you that failed to deliver the services you promised, professional liability insurance can protect you from these claims and help cover any legal expenses related to the suit.
In short, professional liability insurance offers coverage for claims that allege your business caused financial harm to someone else.
Do You Need Both Policies?
The answer depends on the nature of your business. If you are a small business owner, it is essential to evaluate the type and level of risk your business faces to determine the insurance coverage you need.
For instance, if you run a garage, then you may need general liability insurance to protect against accidents that may occur at your premises. However, if you’re an attorney or a consultant, then professional liability insurance may make more sense, as your clients may sue you for negligence or lack of professional conduct.
Again, as a business owner, it’s important to understand all the risks that your business may face during its normal operations and choose the insurance policy or policies that offer the best protection.
The Bottom Line
In the final analysis, when it comes to general liability insurance vs. professional liability insurance, and which policy may be right for your business, that will depend largely upon the type of business you have and the work you do as part of your business.
While both insurance policies aim to protect your business, they cover different types of claims. Therefore, carefully evaluate your business risks and weigh the costs and benefits of both policies.
Additionally, be sure to consult with a professional insurance agent or a legal advisor to ensure you get the best insurance policy that fits your business needs. Some professionals, such as doctors, architects, and engineers, may require both general liability and professional liability insurance.
Conclusion
No matter the nature or size of your business, general liability insurance and professional liability insurance can provide vital protection to help safeguard your business from unforeseen circumstances.
Though both insurance policies may seem similar, they have significant differences that business owners must understand before settling on either. By evaluating the risks and needs of your business, you can choose the most appropriate policy.
Also, be sure to consult with a professional insurance agent or a legal advisor to help ensure you get the best insurance policy that fits your business needs.