General liability vs. professional liability insurance – A lot of people experience difficulties when exploring the world of insurance as it is considered “complex”. One of the complicated aspects of this realm is protection for various parts of business operations.
Amidst the common types of insurance for businesses, general liability insurance and professional liability insurance are quite popular. However, both insurance types are different and not everyone understands their differences.
Although both of them protect businesses from associated financial risks, their objectives and spectrum differ. Thus, in this blog post, we will be exploring their differences and figuring out which is a better choice for the field of your business.
What is General Liability Insurance?
General liability insurance, also known as GLI is a fundamental form of insurance that offers coverage for different forms of risks that a business can face or experience. Moreover, it offers protection against liabilities from claims of negligence, accidents, and injuries that can take place during a business operation.
What Does General Liability Insurance Cover?
Here is what general liability insurance usually covers:
- Property damage.
- Bodily injury.
- Legal defense costs.
- Personal injury.
- Advertising injury.
- Reputation harm.
What Does It Not Cover?
You will be getting coverage for any of the following with a general liability insurance policy:
- Employee injuries.
- Professional errors.
- Damage to your property.
- Intentional damage.
Who Needs a Policy?
You might want to consider purchasing a general liability insurance quote if you operate in any of the fields below:
- IT/technology businesses.
- Accounting firms.
- Real estate agents.
- Consultants.
- Cleaning services.
- Contractors.
- Financial services.
- Media and advertising services.
- Landscaping services.
- Manufacturers.
- Construction businesses.
- Restaurants.
General Liability Insurance Cost
The average cost of purchasing a general liability insurance policy is $42 per month. However, these figures are affected by several factors. In other words, the price of purchasing a policy is determined by:
- Age of the business.
- Coverage limits.
- Business size.
- Industry risk.
- Location.
- Business revenue.
- Coverage limits.
- Claims history.
What is Professional Liability Insurance?
Professional liability insurance is also known as error and omissions (E&O) insurance. It is a type of insurance that offers coverage and protection to professionals against liability from failure to perform professional duties completely or negligence claims. Thus, if you provide professional services or advice, this type of insurance is important for both individuals and businesses.
What Does Professional Liability Insurance Cover?
Here is what professional liability covers:
- Copyright infringement.
- Negligence claims.
- Misrepresentation.
- Settlements and judgments.
- Legal defense costs.
- Claims and damages.
- Incorrect advice.
What Does It Not Cover?
Here are events or incidents that a professional liability insurance quote will not cover:
- Property damage.
- Intentional misconduct.
- Data breaches.
- Employee injuries.
- Criminal acts.
Who Needs a Policy?
Having professional liability insurance will be quite beneficial for individuals or businesses in any of these fields:
- Financial advisors.
- Investment advisors.
- Consultants.
- Counselors.
- Graphic designers.
- Health care professionals.
- Technology professionals.
- Insurance agents.
- Tax preparers.
- Lawyers and attorneys.
- Real estate agents.
- Accounting firms.
- Personal trainers.
- Marketing professionals.
- Engineers and architects.
Professional Liability Insurance Cost
The average cost of professional liability insurance is $61 monthly. However, this is not the fixed price. Instead, some factors determine and affect the price of this quote. They include:
- Coverage limits.
- Number of employees.
- Deductible.
- Industry type.
- Industry experience.
- Claims history.
- Location of business.
Similarities Between General Liability and Professional Liability Insurance
Both general liability insurance and professional liability insurance are important types of insurance, especially for business. However, they cover different forms of risks or threats and have different purposes. Here are the main similarities between general liability insurance and professional liability insurance:
- They Both Protect Businesses from Lawsuits
Businesses as well as the owners are prone to face different risks of potential high costs and litigation risks, and all of these can result to legal fees. But if you have a professional liability insurance or general liabilityinsurance policy, legal expenses will be covered.
- They Both Meet Client Contract Obligations
Some customers or clients might make it compulsory for you to have one of these types of insurance. For example, in the construction field, general contractors usually ask subcontractors to have general liability insurance.
General Liability Vs. Professional Liability Insurance
Even with their similarities, there are also differences to these forms of insurance. For better details, here are the differences between general liability insurance and professional liability insurance:
- Covered Risks
General liability insurance usually offers protection to business against reputational harm, accidental property damage, copyright infringement, injuries to others, and advertising injury.
On the other hand, professional liability insurance offers protection against errors or mistakes in professional services. For example, breaching good faith and fair dealing and giving out incorrect advice.
- The Form of Harm Covered
Typically, general liability insurance focuses on physical harm or injuries and compensating for damage to a client’s hardwood floors.
Professional liability insurance, on the other hand, pays more attention to financial losses like revenue loss of a client as a result of incorrect advice.
