Running a business has always been a risky venture. These days, the risks are greater than ever with the continuing rise in liability claims. That means it’s more important than ever to have financial protection in place to guard your business against a potentially costly liability claim.
But many business owners still aren’t clear about the exact type of financial protection they need for their specific risks. Some make the mistake of believing their Commercial General Liability policy has all the bases covered, which leaves them vulnerable to a host of liability claims that only a professional liability policy could protect them from.
General Liability vs Professional Liability
Understanding how these two types of liability insurance compare will help you make informed decisions about matching your unique liability risks to the right coverage. Granted, there are a few similarities between the two. They’re both designed to protect against business liabilities and meet contractual requirements. But that’s where the similarities end.
What’s the difference?
The main difference between General Liability insurance and Professional Liability insurance is the type of risks they cover. General liability covers physical losses, while professional liability is more focused on financial losses resulting from a business’ products or services.
Let’s take a closer look at each type of coverage.
Commercial General Liability
A Commercial General Liability (CGL) policy provides broad coverage against most third-party claims for property damage, bodily injury, advertising injury, copyright infringement, or reputational harm arising from your business operations. For example, if a customer slips and falls and gets injured on your business property, or if someone sues you for using their copyrighted material, your CGL policy would respond. For some businesses such as construction professionals, manufacturers, and retailers, the CGL policy might also include products-completed operations liability insurance, which protects the business from lawsuits arising out of finished work that physically harms someone.
Also known as Errors and Omissions (E&O) insurance, professional liability coverage protects your business against claims of negligence related to a professional service. For example, if you’re a consultant and a client sues you for providing bad advice that results in their financial loss, professional liability insurance would cover you. Coverages include protection against actual or alleged errors and omissions when providing professional services; and defense costs if a claim is filed against you.
Which Coverage Do You Need?
Actually, it’s not an either/or situation. Depending on your business, there’s a good chance you need both to be adequately protected.
For any type of business, you need some form of liability insurance to protect your livelihood. A General Liability policy is a necessity, the backbone of your business insurance coverage.
Professional liability is a specialized coverage that’s ideal for consultants, attorneys, architects, engineers, counselors, and others that provide professional advice and consulting.
In today’s legal environment, running a business without liability protection is a huge gamble that could cost you everything. Work with a reputable insurance carrier to make sure you have the right liability protection for the unique risks your business faces every day.
Need help? Talk to the insurance professionals at BNC today.