General Liability vs. Professional Liability Insurance: Which Do You Need?

By  //  December 24, 2021

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Business insurance is a necessity for organizations of all sizes and sectors, but it can be difficult to know what cover you need. Insurance protects your company from different types of risk, but not all types of risk apply to every business.

So knowing the difference between the types of cover is important if you want to protect your business effectively. So, let’s look at a key type of business insurance: liability insurance.

Liability insurance protects organizations from lawsuits pertaining to damage to a person or property. There are two main types of liability: general liability and professional liability, and we’re going to look at the differences between them in this article so you know which you need for your business.

Professional Liability 

First we’ll look at professional liability insurance. It’s also known as errors and omissions insurance, and this kind of insurance focuses on the services that your organization provides. As its other name suggests, professional liability insurance protects your business for any mistakes that you might make when working with clients. 

If a client were to feel that you failed to deliver on your promises, they could take legal action. If this were the case, your professional liability cover would protect you from being financially liable for any costs incurred in this process. 

General Liability

General liability, however, protects organizations from any claims of damage to property or persons. This includes:

 Injuries or bodily harm on your premises

 Property damage 

 Advertising injuries

 Faulty products

For businesses that have a store or office where clients and other stakeholders visit your business, it’s good practice to have a general liability insurance policy in place.

Anything can happen on your premises, and some accidents are completely random, and therefore impossible to prevent. The next best thing is to have an insurance policy in place that can protect your business if claims were to be made. 

What is the Difference?

The main difference between these two types of liability insurance is what they cover. We can look at it like this: general liability insurance pertains to tangible objects and damage, whereas professional liability covers intangible parts of a business service. 

Working Out Which Cover You Need

If you operate a service business, there’s a good chance that you would need both types of cover, especially if you have access to a building or workspace as a part of your business.

Say, on the other hand for example, you’re a self-employed consultant. You may only need professional liability insurance to cover the services you provide as opposed to a general liability insurance policy which protects against claims against a person or property. 

The main point to highlight here is that insurance policies aren’t a one size fits all solution. Depending on your individual business set up, type and size, you’ll likely need different amounts of cover.

Overall, each business is different and has varying insurance coverage needs. And if you aren’t sure what kind of coverage applies to your business, you should speak to an insurance professional who can look at your unique case and recommend the right policy package. Having this will protect your organization in the long run and help you ensure business success.