Wondering what does general and professional liability cover? Read on to know the differences between both types of insurance. Learn what each policy covers, who needs them, and why they are beneficial.
Think of all the things that could go wrong when running your business. There’s a lot to think about, and liability insurance is one of the most important pieces of your risk management puzzle.
There are many different types of insurance that you can choose from, and it can be difficult to decide what is the best option for you. In this blog post, we will compare general liability insurance and professional liability insurance. Both of these policies have their own unique benefits, but the question is, what does general and professional liability cover? And how do you know if you need it?
Let’s find out:
General Liability Insurance For Businesses
General liability insurance protects you from third-party claims of bodily injury, property damage, or personal injury that occur as a result of your business operations. It’s essential to have this coverage in place so that you can avoid financial ruin if something were to happen, such as a lawsuit event.
Please Note: Even if you are not at fault, you may still be held liable if the plaintiff can prove that your business was negligent in some way.
What Is Covered In General Liability Insurance?
The big question that might come to your mind is, what does general liability insurance cover? So here’s the answer you’re looking for.
General liability insurance covers third-party bodily injuries, property damage, and medical expenses that happen because of your business. It also covers any legal expenses that come from defending yourself in a lawsuit.
For example, let’s say you own a restaurant and someone slips and falls on your wet floor. If they sue you, general liability will cover their medical expenses and any legal fees you rack up during the case.
Here’s one more thing to keep in mind: GLI does not cover injuries sustained to your employees, damage to your property, or professional advice you give that leads to financial losses.
Professional Liability Insurance For Businesses
Professional liability insurance, also known as errors and omissions insurance, protects you from claims from providing professional services. If you make a mistake or omission in your work, and it causes financial losses for your client, they could sue you.
For example, let’s say you’re an accountant and you make a mistake on your client’s taxes. If they have to pay additional fees because of your error, they could sue you for the losses.
Professional liability insurance would cover your legal fees and any settlement or judgment against you.
What Is Covered In Professional Liability Insurance?
Court costs and settlements: If you’re sued, professional liability insurance will help cover your legal expenses, including court costs and settlements.
Damages: This type of insurance can help pay for any damages you’re ordered to pay by a court.
Defense costs: If you’re sued, your professional liability policy will also help cover the cost of your defense, including attorney’s fees.
Professional liability insurance is important for any business that provides advice or services to clients. This includes businesses in industries such as:
- Accounting
- Architecture
- Consulting
- Engineering
- Insurance
- Real estate
What’s The Difference Between General And Professional Liability Insurance?
The main difference between general and professional liability insurance is that general liability covers any accidents or injuries that happen on your property. In contrast, professional liability covers any mistakes or errors you make in your work.
But there are a few other key differences:
General liability insurance covers third-party property damage and bodily injury, while professional liability only covers financial losses for your clients.
Professional liability insurance typically has lower limits than general liability insurance.
Is It Necessary To Have Both General And Professional Liability Insurance?
Long story short, general liability insurance is a must for any business.
As for professional liability insurance, it depends on your business. If you have a high risk of being sued for negligence or making an error in your work, you should get professional liability insurance.
When To Have Both Insurances?
If you have a brick-and-mortar business, you might need both general and professional liability insurance to protect yourself from lawsuits fully.
What If I Don’t Have Either General And Professional Liability Insurance?
If you don’t have any form of liability insurance and someone sues you, you’ll have to pay the legal fees out of your own pocket. This can quickly bankrupt your business.
Liability insurance is important, but it’s not the only type of insurance you need. Make sure you’re also insured for things like property damage, product liability, and workers’ compensation too if you have a large business.
It’s Never Too Late To Get Insurance For Your Business
Remember that even if you don’t currently have either type of coverage, it’s never too late to get it. So contact an insurance agent today and find out how you can protect yourself and your business from potential lawsuits.
The Final Word
While there are some limitations to what general and professional liability insurance covers, it is still an important type of protection to have in place for your business. If you have any questions about what your policy covers, be sure to contact your insurance agent or broker. They will be able to help you.
So there you have it! A breakdown of what general and professional liability cover. Now you know what each type of coverage entails and when you might need it.
