All companies, large and small, face the risk of liability. Professional liability insurance and general liability insurance both protect your business. The main difference between these two types of insurance is the different risks they cover.
What is professional liability insurance?
Also known as error and omission insurance (E&O), professional liability insurance is designed to protect you if a customer applies for damages as a result of the services provided by your company. For example, if a web developer's fault costs a customer an online business, the customer may sue for damages. Professional liability insurance provides coverage for financial damages in the event of errors, negligence, errors and omissions during the performance of a professional service.
If you are trained and educated to perform a service or trade, you should have liability insurance. A dissatisfied client can bring an action, even if you perform your professional tasks diligently and responsibly. Professionals who need fault and negligence insurance include lawyers, doctors, dentists, brokers, accountants, bookkeepers and financial advisors. This coverage protects against allegations of bad faith, bad advice, misrepresentation, copyright infringement and malpractice.
What is general liability insurance?
General liability insurance protects your company against third party claims regarding:
- Bodily injury caused in your premises
- Damage to property caused by your company or its employees
- Damage caused by your products
- Defamation, defamation or copyright
Who needs liability insurance?
Most companies need general liability insurance. Defending yourself against a lawsuit can take a heavy financial toll, even if your business is not at fault. We live in a litigious society. Many companies eventually face some form of litigation covered by general liability insurance. If your company manufactures or sells a product, you may want to consider a product liability policy in addition to general liability insurance.
What are the differences between professional liability and general liability insurance?
These two types of liability insurance cover different types of exposure. Professional liability insurance is designed to protect professionals who are exposed to liability when performing a service. It covers legal fees, litigation costs and damages that they may have to pay, as a result of allegations of malpractice, misrepresentation, bad faith, bad advice, copyright infringement, etc. General liability insurance, on the other hand, protects a company from a wide range of claims, including bodily injury, property damage, personal injury (defamation or defamation) and product liability.
In a nutshell, the general liability insurance covers physical damage or damage to property arising from the business. Professional liability insurance covers claims for negligence in connection with professional advice or services. Both are non-life insurance, which means that you are covered if you have insurance when you make a claim, regardless of when the event occurred. Liability insurance, however, has a retroactive date exception. This means that a claim arising from an event that occurred before the retroactive date of the policy will not be covered.
Depending on your type of business, you may need both professional liability and general liability insurance for adequate protection. Our experienced agent will be happy to give you advice and help you get the liability insurance you need.