General liability insurance covers you against bodily injury or property damage liabilities arising from a third party. That is, it covers you against claims made by a customer but not by your own employees (since workers comp covers that.)
Additionally, general liability will typically cover liabilities over allegations of slander/libel, copyright violations, and a few other things.
It will also cover your legal fees and settlements arising from these types of lawsuits.
What Is Professional Liability Coverage For?
Professional liability insurance is also called errors and omissions (E&O) insurance and is a kind of “malpractice” insurance.
It’s possible that professional and general liability coverage might overlap at points, but typically they do not. Professional liability covers you against lawsuits based on your alleged failure to perform a service properly.
If your work had mistakes, omissions, or was done in a sloppy or negligent manner – professional liability applies. And if it’s a suit based on a contract violation, this kind of insurance also generally covers it.
Comparing General VS Professional Liability
There are many important differences between general liability as opposed professional liability insurance.
First of all, they simply cover different risks. One is concerned with personal injury or property damage lawsuits by customers or other 3rd parties. The other deals with professional mistakes/omissions that might allegedly lead to financial loss by a 3rd party.
Both insurance types deal only with third-party claims. But one is in the realm of physical damage and the other in that of financial damage.
It’s true that a “completed operations rider” can be added to a general liability policy to cover you over suits arising from accidents involving a completed product or project. And professional liability also covers suits based on damage from completed work. But the difference remains that one covers physical losses and the other covers financial losses.
Do I Need Both Types Of Policies?
Given that, despite the similar sounding name, general and professional liability insurance do not cover the same things – you may be wondering at this point if your business needs both types of insurance.
The answer is, “Maybe.” Almost every business type and size should protect itself with general liability coverage, and anyone with both general and professional liability cover will benefit to some degree.
But it’s mostly those working in the area of professional services who definitely need professional liability – and they can’t do without general liability either. But any business that frequently enters into contractual agreements could do well to have professional liability cover too.
Whether or not your business needs one or both of these insurance types has to be determined on an individual basis. You have to assess your risks and your resources and think through what you would do in specific situations, should they arise.
For assistance in understanding how a particular type of lawsuit might affect your business and how general and/or professional liability cover could benefit you, feel free to contact Flagler County Insurance Agency today!