What Is the Difference Between General Liability and Professional Liability?

Despite what some may think, professional liability and general liability coverage are not the same. These two insurance policies cover completely different areas of liability for your business. Keep reading to learn more.

Key Differences
General liability coverage can protect your business against the resulting expenses if you are held responsible for injuring a third party or damaging their property. Specifically, this insurance can help cover the costs stemming from incidents involving third-party bodily injuries and property damage that arise out of normal business work and nonprofessional negligent acts. Nonprofessional negligent acts refer to instances in which your business failed to uphold its general responsibility of not causing harm to others. For instance, general liability insurance would apply if a customer slipped and fell on your property due to a spill on the floor that your employees failed to clean up.

On the other hand, professional liability insurance can help protect your business if the work or advice you provide results in client losses and subsequent professional negligence lawsuits. This type of policy may apply to professional mistakes ranging from incorrect advice, breach of duty, incomplete work, missed deadlines, misrepresentation and even wrongful acts. In the event of a professional negligence lawsuit, this coverage can help reimburse the associated legal defense expenses and settlement costs. For example, this coverage would apply if a customer sued your business for failing to complete a service they hired you for, thus causing them substantial losses.

Who Needs Professional Liability Coverage?
Professional liability insurance has many names, depending on your location and industry. In the United States, this insurance is commonly known as errors & omissions (E&O) coverage. In the medical field, it’s known as medical malpractice insurance.

Regardless of its name, professional liability insurance is a critical form of coverage for any business that provides expert advice or services to their clients. This type of insurance is more prevalent within certain industries. Professionals that are likely to need this coverage include:

Medical professionals

Attorneys
Accountants
Architects
Insurance professionals
Investment advisors

Remember that this isn’t a complete list— make sure to speak with a trusted insurance professional about your specific industry’s needs.

How Much Professional Liability Do I Need?
The amount of professional liability coverage you need depends on your specific business operations and industry risks. High-risk businesses—such as those within the health care or financial sectors—should consider carrying additional professional liability insurance. For businesses that are particularly vulnerable to expensive liability lawsuits, umbrella liability policies are also available. An umbrella liability insurance policy steps in when a claim exceeds one of your existing liability policy’s limits. This type of policy can work in conjunction with both professional liability and general liability coverage.

Consult a trusted insurance professional for more information on your liability coverage needs.

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