• February 15, 2021

Difference Between General Liability and Professional Liability Insurance

Difference Between General Liability and Professional Liability Insurance

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As a business owner, you will be required to purchase several different types of commercial insurance in order to own and run your business, regardless of the state in which you operate. Two of the more common types of insurance are general liability insurance and professional liability insurance. Liability is a risk for every business, which is why there are so many types of liability insurance, each providing protection in their own ways. 

These are the major differences between general liability insurance and professional liability insurance. 

What is General Liability Insurance?

General liability insurance is a type of commercial insurance that covers you in the event that a person sustains harm (generally physical harm) at your place of business. This can include, but is not limited to: 

  • Injury claims: for example, someone falling while on the premise of your business 
  • Medical bills: any bills that result from a person sustaining an injury at your business 
  • Property damage: any physical property damage sustained by a person as a result of your business or someone who works there 

Some non-physical harm that can be covered by general liability insurance (depending on your plan) can include reputational harm, copyright infringement, and others. It should also be noted that physical injuries sustained by your employees while working for you are generally not covered under general liability insurance. These are usually covered by workman’s compensation insurance. 

It is recommended that most businesses, especially those who have a physical location, carry this type of business insurance. 

What is Professional Liability Insurance?

Professional liability insurance, which is also often referred to as errors and omissions insurance, differs from general liability insurance in that it covers claims of financial damage sustained by a person because of the services your business provides. 

Professional liability insurance generally helps your business cover its legal costs if litigation is brought against you by a client who argues they have sustained damage by your business. These types of damage claims can include: 

  • Advice that resulted in financial loss 
  • Bookkeeping errors that lead to financial loss 
  • Actions that result in lost sales for a client 
  • Incorrectly filed taxes 

The claims of damage can widely vary depending on the types of services your business provides. If you provide any type of service to a client, especially in the financial or legal industries, it is recommended that you carry some type of professional liability insurance. 

 

Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly. 

 

Need commercial insurance for your business? Not sure which types you need to carry? Get in touch with the commercial insurance experts at The Patrick J. Thomas Agency today.