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General liability vs. professional liability: Know the difference.

General liability vs. professional liability: Know the difference.

As an entrepreneur, running your own company can be rewarding, but it also has its share of risks. One of the biggest risks that business owners face is a lawsuit, which could cost you time and money not to mention damage your reputation and relationship with customers.

To help you protect yourself from this risk, read on as we go over what general liability insurance and professional liability insurance cover and explain why you should have both as an entrepreneur.

The basics of general liability

In its simplest form, general liability insurance covers you in case of a lawsuit or claim against you by someone you interact with in your daily life.

General liability insurance is often referred to as slip and fall or malpractice insurance because it can protect you from legal action if an accident occurs on your property or if your services cause injury to a client.

In some cases, though, general liability may not be enough to protect you from all potential risks associated with running a business.

Professional liability insurance specifically protects professionals like doctors, lawyers, accountants and others who provide services for a fee.

Professional liability policies are sometimes called errors and omissions insurance since they help you protect yourself against negligence that leads to financial loss.

For example, if your accounting service files incorrect tax returns for their clients (and those errors lead to financial loss), professional liability would cover those losses.

However, general liability wouldn’t pay for any of the damages done to the clients’ finances- it only covers accidents that happen on your property or injuries caused by your service.

You can’t sue an accountant for making mistakes with taxes- even if you suffered damages- unless he/she was negligent.

The basics of professional liability

Professional liability insurance is a form of general liability that provides coverage for an individual’s negligent acts or errors committed in their capacity as an expert in a profession or occupation.

For example, if you are a doctor and you accidentally misdiagnose your patient, your professional liability insurance would cover the damages because they were committed during the course of your work.

General liability, on the other hand, covers damages caused by injuries to another person not resulting from your actions in the context of your business.

If you spill coffee on someone at a café and it results in burns, your general liability insurance will cover it but not if they slip while walking down stairs that happen to be wet due to spilled coffee; this would only be covered by your premises owner’s property damage insurance policy.

It is important to note that these two types of policies can be bundled together as one with some providers.

The third type of insurance you may want to consider is automobile liability which typically covers any physical injury suffered by people who are inside your car (i.e., passengers) or any property damage inflicted upon those outside the vehicle (i.e., pedestrians).

With so many different types of protection available for different scenarios, speak with your agent about what best fits your needs!

How they differ: general vs. professional

While they are similar in many ways, there are some key differences that you should be aware of before deciding which type of insurance to purchase.

General Liability Insurance, unlike Professional Liability Insurance, is coverage for your company in case someone gets hurt on your premises or if one of your employees injures a customer or another employee while on the job.

This coverage can also extend to damage caused by a product that you sell, such as food at a restaurant or items at an art supply store.

The downside of this type of insurance is that it only covers injuries and property damage. In contrast, Professional Liability Insurance also covers other things, like errors and omissions from doctors and attorneys (i.e., malpractice), so it offers more protection than general liability insurance does.

A good rule-of-thumb is to carry both types of insurance if you’re working in a field where there’s a higher risk for malpractice suits or other issues that could lead to lawsuits against your business.

For example, if you own a small retail shop and sell mostly homemade goods, general liability would cover any potential accidents involving customers on your premises.

On the other hand, professionals who provide services—such as physicians and lawyers—need professional liability to protect themselves against mistakes or intentional acts that may lead to legal action taken against them.

The importance of knowing the difference

The difference between general liability and professional liability is that a general liability insurance policy covers property damage and bodily injury to people other than employees, while a professional liability policy covers property damage and bodily injury to employees only.

Professional liability insurance also includes coverage for errors and omissions, which protects professionals from lawsuits if they have not fulfilled their obligations as outlined in their contracts.

With these policies, the employer can be liable for any damages caused by an employee acting on behalf of them during the course of employment.

As such, these policies are often required when hiring contractors or freelancers to work on projects where there is potential liability exposure – even if you are working with someone who does not provide services related to your profession or trade.

In many cases, professional liability policies cover some form of personal injury like libel, slander and invasion of privacy.

General liability typically will not cover these types of claims; so it’s important to know which type you need before committing yourself to purchasing one.

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