Biggest Misunderstanding: General Liability Doesn’t Cover Everything

Biggest Misunderstanding: General Liability Doesn’t Cover Everything
Do you know the difference between professional and general liability? Well, you need to, AND you need to be working with someone who can inform you on the difference.

As a business owner, it can be tough to figure out what types of insurance you need. The right policies depend on the types of risks your company faces.

All businesses have liability risks, but the type of liability can change based on what your business does. For example, a construction contractor could be liable for a worksite injury, 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 insurance and professional liability insurance come into play.

 

Professional Vs. General 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 covers more abstract risks, such as errors and omissions in the services your business provides.

 

General Liability doesn’t cover everything

General liability insurance does help cover:

  • Bodily injury claims, such as someone getting hurt at your business.
  • Medical payments if someone gets hurt on your business property.
  • Property damage to your business or employees.
  • 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 advertisement.

 

Professional liability insurance, also known as errors and omissions insurance, 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 carry professional liability 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., especially if you work with clients or customers.

If you are having a difficult time deciding what type of insurance you should get, or are interested in either general or professional liability insurance, contact us today!

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