October 10, 2019

Professional Liability vs. General Liability Insurance

More than a handful of small business owners we speak with end up asking the question: 

“What’s the difference between general liability and professional liability insurance?”

Many people struggle to understand why you need professional liability coverage when general liability insurance seems to have you covered. 

Interestingly, the answer to this question lies in the lesser-known name for professional liability protection: Errors and Omissions Insurance. Focusing in on this lesser known name helps us unravel the differences between these critical coverage.

Like the name implies, Errors and Omissions coverage is designed to protect a professional from financial damages resulting from mistakes made rendering professional advice. Especially important in the world of consulting and project management, E&O helps make sure the inevitable mistake, mistruth, or omission doesn’t end up costing you your business.

This insurance covers negligence in providing professional services. Whether this negligence was deliberate or accidental, E&O can help safeguard your business against financial damages stemming from your error. 

As a general rule of thumb, professional liability insurance is almost always required for professionals in industries with an established professional code of conduct or other set of measurement standards. 

Home inspector in blue collared shirt and red hard hat holding a clipboard while inspecting the siding of a house

One example of a situation in which professional liability coverage would be helpful is in the construction industry.
Let’s say you were hired as a consultant on a commercial construction project, tasked with directing electrical subcontractors on how they should be installing the project’s electrical systems.

Not only can an error in judgement on your part end up getting you entangled in a costly lawsuit, but you can also be held legally liable for mistakes made by subcontractors under your direction. 
Even if you correctly instructed a subcontractor on what to do and how to do it, their error is still your responsibility from a legal perspective.
With this in mind, it’s easy to understand why E&O is such an important coverage to carry for a wide variety of professionals.
Professions that would benefit from carrying this coverage include, but are not limited to:

-Insurance Agents
-Occupational Therapists
-Physical Therapists
-Project Managers

While professional liability insurance can help protect experts on mistakes that were in their control, general liability coverage is more focused on protecting against things that are out of our control.

Everything from the physical assets of your business to your employees, and even your customers carries a unique risk profile that threatens your bottom line daily.

From slip and falls to car accidents, to lawsuits and more, General Liability should be considered a non-negotiable for practically every business in existence.

In fact, this coverage is so critical that many professionals are required to carry GL coverage by law.
Even in cases in which it’s not legally required, general liability is almost always a protection you cannot afford to operate without as a business owner.

The last thing you want is an unexpected lawsuit to end up costing you the very business you worked so hard to build.

At the day, while both general liability and professional liability coverage are critical for many business owners, GL should be considered as a critical coverage for all.

Wondering what other coverages make sense for your business? 

Our business insurance experts are standing by.

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