The Difference Between General Liability and Professional Liability Insurance

Businesses of all kinds must ensure adequate protection for their operations and assets. Appropriate commercial insurance is vital to help financially protect against numerous risks that could derail operations. When it comes to third-party claims against an organization, liability insurance is a must.

While liability coverage is key for most business insurance policies, knowing what kinds you need can be tricky. Let’s explore the differences between two common forms of liability insurance: general liability and professional liability.

General Liability Insurance

General liability coverage is designed to help cover physical third-party losses for which your business is responsible. The following are potential scenarios that a policy may cover:

• A customer slips in an office lobby and needs medical attention.

• An employee damages a customer’s doorframe when renovating their kitchen.

• A third party files a lawsuit against your business for copyright infringement.

• A person is injured by a product that your business produces.

While nonexhaustive, the above list illustrates the wide array of claims general liability insurance may help cover.

Professional Liability Insurance

Unlike general liability coverage, professional liability insurance (also known as errors and omissions insurance) doesn’t protect against physical losses or personal injuries. Rather, this insurance aims to cover third-party claims of inadequate or negligent services that resulted in financial loss. Notably, policies can help cover business legal costs and settlements related to such claims.

Potential scenarios covered by professional liability insurance may include the following:

• A financial consultant provides poor advice that results in monetary losses.

• An architect negligently introduces an error in a building plan.

• A doctor is sued for their treatment of a patient.

Professional liability insurance should be considered essential for any business that offers professional services or advice. In the case of medical practitioners, medical professional liability insurance may even be required.

Bottom Line

Summarily, general liability insurance can help cover physical losses sustained by third parties; professional liability insurance can help cover legal costs and settlements related to claims of inadequate professional services. Oftentimes, businesses may require both forms of coverage, in addition to other commercial insurance.

Contact My Insurance Store to discuss your operations and what types of liability insurance you may need. We can help assess your needs and recommend suitable options.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.