Businesses are concerned about liability because they can be held responsible for the damage and harm done as a direct or indirect consequence of doing business. Torts can be very expensive for business owners to deal with, and businesses don’t have to be at fault to face claims and lawsuits. Sometimes, all it takes is one unhappy or injured customer or client to jeopardize the finances of a business.
General Liability Insurance and Professional Liability Insurance ensure that businesses won’t be on the hook for legal expenses. These two provide different liability coverage for businesses, although the boundary between their diverse coverage is sometimes not very clear.
General Liability Insurance
Every business should carry general liability insurance as it protects the business from property damage, bodily injury, advertising injury, environmental impact, and personal injury claims. It kicks in to protect the business from financial loss resulting from unforeseen negligence up to the coverage limit the company carries. This insurance policy protects businesses from lawsuits brought by a visitor injured in a slip and fall accident on the company’s property, and other similar types of claims.
Professional Liability Insurance
Professionals are hired for their expertise in a certain field, and clients heavily rely on their particular advice. However, the guidance or advice they provide may result in financial losses to clients. In such a case, a professional may be held liable for the client’s losses.
Professional Liability Insurance, also known as Directors and Officers Liability, Malpractice Liability, or Errors and Emissions Liability, protects professionals from liability against claims arising from violation of good faith and fair dealing, misrepresentation, negligence, and inaccurate advice as a professional.
Main Differences In Coverage
General Liability Insurance and professional liability insurance cover certain liability claims, but not the same claims. Most businesses, however, take advantage of the two policies and have both policies work together to mitigate the expenses of their business when accidents and oversight subject their company to a legal trouble.
General Liability Insurance covers bodily injury or property damage; covers damages resulting from the day-to-day operations of the business; with defense costs outside the liability limits; typically on an occurrence basis; allows Additional Insureds; and may be scheduled under an Umbrella Liability Policy.
Professional Liability Insurance covers bodily injury, property damage, or economic damages; covers damages resulting from the company’s professional service; with liability limit that covers defense and indemnity payments; typically on a “claims-made” basis; doesn’t allow Additional Insureds; and can’t be scheduled under an Umbrella Liability Policy.
The differences between General Liability Insurance and Professional Liability Insurance put them in separate categories. Knowing the disparities between the two is critical in determining which liability insurance suits a certain type of business, in order to protect the company’s interests and avoid putting the business in serious financial jeopardy.