YOU ASK:

General liability versus professional liability coverage – which one to choose?

WE ANSWER:

It's not really about choosing between general liability or professional liability. If you have a business or a company that provides services or advice to clients for a fee, you are in need of both.

Similarities

General liability and professional liability are both similar in that they protect a business from any liability that they might face with regards to a third party who wants to make a claim to do some kind of damage or loss they experienced. These coverages protect you from risks with regards to your responsibility to your customers and to people your business comes into contact with.

Both will pay for:

  • Legal defense costs
  • Damages - this may be a settlement agreed upon with the claimant or as a judgment ordered and required by law

Differences

The difference is that professional liability is more specific to the particular profession being covered. General liability insurance is easier to obtain and it is also more or less standardized across most types of businesses. Professional liability insurance, on the other hand, is more specific, since various professions have various needs. That is why this type of insurance also is called different names - medical malpractice, errors and omissions liability insurance and so on.

Coverage. General liability will protect your company or practice against bodily injury, property damage, advertising injury and personal injury (for damage such as libel or slander). Meanwhile, professional liability will protect your business or practice against its failure to perform or for losses resulting from error or omission with regards to the product or services being sold. It will also cover against personal injury, breach or security, breech of intellectual property or warranty.

Who's involved. With professional liability, the insurance protects against claims from clients or customers. However, for general liability, the insurance will protect against a wider scope of claimants - not just customers, but also of competitors, visitors or even trespassers. In essence, it will cover just about anyone who comes into contact with your business - through your product, through your business office or area or even through your advertising campaigns.

Kind of damage covered. For general liability insurance, the damage being protected against is usually bodily injury or damage to property. Another area of damage may also be damage to a person or company by your businesses' claims or libelous statements. For professional liability insurance, the damage being protected against is usually financial in nature - a financial loss that resulted in bad advice or service you failed to provide the client.

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