What’s the difference between General and Professional Liability Insurance?

Sean FriendGeneral Liability, Professional Liability

No matter what kind of business you have, you’re always going to need insurance.  So many things could happen to your business, your employees, or even yourself and it’s important to be and stay protected.  When you have the right information available at your fingertips and know the differences between what’s available, you can make the decision-making process easier. 

General Liability

Wikipedia defines Commercial General Liability as:

“Commercial general liability insurance is a broad type of insurance policy which provides liability insurance for general business risks.”

Wikipedia

What does that even mean? 

General Liability Insurance is great for businesses.  It is typically used to protect your company’s assets Sometimes small businesses may need help paying unexpected lawsuit costs such as when someone is unexpectedly injured at your place of work or if someone’s property is damaged.

For example, let’s say you own a storage unit rental property.  People are coming in and out daily.  Not only do you interact with people, but you also store their personal belongings.  Now the unexpected happens, while a client is storing their belongings in one of your units, the ceiling collapses, damaging their belongings and injuring the client in the process.  General Liability Insurance would help cover the costs to you and your business incur.

Professional Liability

Nobody is prefect. (See what I did there?) Even when you are the most meticulous, professional, and studious to your craft, in the end we are human, and we make mistakes.  We learn from our mistakes and these mistakes make us stronger as people.  Mistakes in business although, depending on the type of mistake could be costly to you and your business.

Professional Liability Insurance helps protect you and your business when a mistake is made that has caused a client or customer financial harm or a service that was promised was not fulfilled. 

In some cases, a customer or client may want to sue you or your business even when you have done nothing wrong.  If the client or customer believes you didn’t provide them the highest level of service, or received bad service, they may make a claim or sue you or your business.

For example, let’s say you have an accounting firm and one of your best accountants made a clerical error.  Puts a zero where a one should be or vice versa and it goes unnoticed.  This could cost the client or customer potentially thousands of dollars in damages, and that client would be coming back to you to fix the situation or could sue you or your business.

When you have Professional Liability Insurance it helps cover situations if a customer or client claims negligence, or mistakes were made, or something caused financial harm to the client or customer.

What next?

Determining the best solution for your business, your employees, and yourself can be a difficult and in many cases it’s best to consult an insurance professional before making a decision. 

If you’re ready to speak with someone who knows insurance and is ready to make a custom plan for you, contact us or give us a call at (505) 305-5290.