General Liability vs. Professional Liability: key differences
General Liability and Professional Liabilities are two types of insurance that often raise questions among business owners and professionals are General Liability and Professional Liability insurance. They serve distinct purposes and offer unique protections. In this article, we’ll stablish the biggest differences between General Liability and Professional Liability insurance.
General Liability Insurance: Protecting Against Common Risks
General Liability Insurance, often known as Commercial General Liability (CGL) insurance, is the foundation of most business insurance policies. It is designed to protect businesses from common liabilities and risks they may face in their daily operations. General Liability insurance typically covers three primary areas:
- Bodily Injury: If a customer, vendor, or any third party is injured on your business premises or because of your business operations, General Liability insurance can cover medical expenses, legal costs, and potential settlements.
- Property Damage: This aspect of coverage safeguards your business in case it causes damage to another person’s property.
- Advertising and Personal Injury: General Liability also protects against claims of slander and copyright infringement. If your advertising materials lead to someone else’s financial loss, this coverage can come to your rescue.
Professional Liability Insurance
Professional Liability Insurance, often referred to as Errors and Omissions (E&O) insurance, is designed to protect professionals, consultants, and service providers from claims related to professional errors or negligence. This insurance is crucial for individuals or businesses that offer specialized services or expert advice. It typically covers the following:
- Professional Negligence: If a client claims financial losses due to errors, omissions, or negligence in the services or advice you provided, Professional Liability insurance can cover legal defense costs, settlements, and damages.
- Legal Fees: Professional Liability insurance can cover the legal fees required to defend your professional reputation, even if the claims are groundless.
- Protection for Various Professions: Professional Liability is relevant for a wide range of professionals, including lawyers, doctors, architects, accountants, IT consultants, and more.
Key Differences Between the Two
While both General Liability and Professional Liability insurance protect your business, they do so in different ways:
- Scope of Coverage: General Liability insurance typically addresses bodily injury, property damage, and advertising-related claims arising from day-to-day operations. Professional Liability insurance, on the other hand, focuses on claims related to professional services, errors, omissions, or negligence.
- Types of Businesses: General Liability is generally suitable for businesses that interact directly with customers and are at risk of common accidents and injuries, such as retail stores and restaurants. Professional Liability is vital for businesses that provide services or advice and can be sued for alleged professional mistakes, like consultants or medical practitioners.
- Legal Costs: General Liability insurance typically covers the costs of defending your business against third-party claims, while Professional Liability insurance covers legal expenses associated with claims of professional negligence.
SmartCompliance keeps track of both
Whether it’s professional or general liability you need to keep track of your active policies. Smartcompliance does exactly that. SmartCompliance builds dashboards and reports with the information about your vendors, contractors and third parties working in your project.
You can see SmartCompliance for yourself with a free demo. Schedule a meeting with us and learn more.
