General Liability vs. Professional Liability– What’s the Difference?

Business professionals bear the burden of responsibility in two distinct arenas: general liability and professional liability. Both types of coverage are necessary to secure sufficient protection for your business.

Here’s the difference:

General liability offers protection against costs associated with property damage, medical expenses, settlements, and slander.

For example, if a customer comes into your store, slips, falls, and sues your business for his medical costs, your general liability insurance will pay for these expenses. Another general liability situation would be a contractor who causes damage to a client’s home and is sued for repair costs.

Professional liability protects your business against claims that you did not do your job properly. In other words, any time you offer a professional opinion or perform a duty, you are professionally liable for the results and are vulnerable to lawsuits.

For example, an accountant who offers tax advice might be sued by a client who loses money after taking that advice. Another company might be sued after failing to file important documents appropriately.

Professional liability insurance is also called Malpractice Insurance and Errors and Omissions Insurance. When business owners hear these terms, they may assume this coverage is necessary only for doctors and similar professions. However, even an honest clerical mistake can be considered an error in professional services and result in a lawsuit.

To fully protect your business, consider holding both types of policies. Your insurance agent can help you determine the coverage that is best for your operations.