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.