General Liability vs. Professional Liability
General liability insurance and professional liability insurance can both protect your business against claims made by customers or clients. But the type of liability insurance you need depends on your business and the types of risks it faces.
General liability protects against claims of bodily injury or property damage, while professional liability insurance protects against claims of professional errors or oversights that result in financial damages. Depending on the type of business you conduct, you may need both of these insurance policies to ensure your business is adequately covered.
Here’s everything you need to know about general liability vs. professional liability insurance.
What is General Liability Insurance?
General liability insurance, also called business liability insurance, protects businesses against claims of property damage and bodily injury.
If a customer or client claims that your business caused injury, property damage, or reputational damage, this type of insurance can help cover expenses like medical payments and legal fees. Without this coverage, businesses may have to cover these expenses out of their own pockets. Small businesses, in particular, may not have the cash flow to pay for these damages.
Business liability insurance is available as a standalone policy or as part of a Business Owner’s Policy (BOP), which includes multiple types of commercial insurance.
What does it cover?
General liability insurance can help cover:
- Property damage claims
- Bodily injury claims
- Medical payments if someone is injured on company property
- Advertising errors like copyright infringement
- Reputational harm, including libel, slander, and privacy violations
As these are common risks that most businesses face, general liability coverage is generally considered necessary for all businesses, and particularly small businesses.
How much does it cost?
The cost of general liability insurance can vary depending on several factors, including:
- Type of business
- Location
- Years in business
- Claims history
- Number of employees
These factors, among others, can have a significant impact on the total cost of your general liability insurance policy. To learn more about how much general liability insurance costs, request a quote.
What is Professional Liability Insurance?
While general liability insurance protects against claims of property damage and bodily injury, professional liability insurance protects you if a customer or client claims that they suffered financial damages due to your professional services.
Also called errors and omissions (E&O) insurance, professional liability insurance is particularly important for businesses and professionals that provide expert services and advice to clients.
For example, if an accountant makes a mistake when filling a client’s tax return that results in a penalty fine, the client may file a claim due to the financial damages they suffer as a result of the accountant’s mistake. In this case, professional liability insurance can cover the accountant’s legal defense costs.
What does it cover?
Professional liability insurance can help cover claims of:
- Professional misconduct
- Personal injury
- Negligence
- Copyright infringement
- Poor advice
Even if you didn’t actually make a mistake, clients can still file claims if they believe your services resulted in financial damages, making it important for professionals to carry E&O insurance.
How much does it cost?
Like general liability insurance, the cost of professional liability insurance is dependent on several factors, including:
- Industry
- Claims history
- Years of experience
- Location
- Number of employees
While costs can vary significantly, professional liability insurance is generally very affordable and can greatly offset the costs required to defend yourself against claims of negligence or professional misconduct.
Who Needs General Liability Insurance?
General liability insurance is an important coverage for most small and medium-sized businesses as it protects against a variety of common risks they may face during normal business operations. Without this coverage, small businesses may not have the necessary cash flow to stay afloat after covering all expenses related to claims made against their business.
Who Needs Professional Liability Insurance?
Professional liability insurance offers essential coverage for professionals that provide expert services and advice. Depending on your state and industry, you may be required to have professional liability insurance. For example, healthcare professionals, like doctors and surgeons, are required to have medical malpractice insurance, which is a type of professional liability coverage.
Other professionals that should have professional liability insurance include:
- Lawyers
- Accountants
- Bookkeepers
- IT professionals
- Consultants
- Advertisers
- Inspectors
Request a Quote
General liability and professional liability insurance both protect businesses against various claims made by customers and clients, though the specific types of claims they cover vary significantly. Understanding the differences between these insurance policies can help you find the right coverage to protect your business.
At KSA Insurance, we work with businesses in South Carolina and across the southeastern United States to help them find comprehensive commercial insurance policies that protect their businesses, employees, and customers.
Contact us today to request a quote and learn more about general liability and professional liability insurance.
