If you are a new business owner, you may have heard of general liability insurance and professional liability insurance mentioned a lot. Both types of insurance police help cover small businesses from liabilities, but each covers a different type of lawsuit. Depending on the type of business you want to own and operate, you may want one or the other – or both! Keep reading our blog to understand the main differences between professional and general liability insurance, and the types of coverage they can offer your business.
What is General Liability Insurance?
Essentially, general liability insurance will protect your company from the common types of lawsuits a business could encounter. This type of insurance policy will activate when a third party (someone who doesn’t work for your business) sues your company over any of the following:
- The damage you caused their property
- Advertising injury (libel, copyright infringement, slander, etc.)
- Any bodily injury they obtained while on your commercial property
As mentioned above, general liability insurance will help pay for the legal expenses related to third-party lawsuits. This could include expenses like court costs, attorney’s fees, settlements, or judgements. If you’re a small to medium business owner, these fees can quickly overwhelm your business, so it’s an important piece of insurance for any company.
What is Professional Liability Insurance?
Professional liability insurance is sometimes called malpractice insurance (depending on your industry). This type of insurance policy is designed to protect you from any lawsuits that could arise from the professional services you provide. Below are some examples of third-party lawsuits that could be covered under professional liability insurance:
- Provided incomplete or substandard work
- Failed to meet your contractual promises
- Provided negligent professional services
- You made omissions or mistakes in your work
Unfortunately, you don’t have to be found at fault to be sued. An unhappy client could name your business in a lawsuit to try and recoup losses even if you aren’t at fault. Professional liability insurance safeguards your business so that you don’t have to pay the legal expenses that would go into arguing against the claim, even if their claim is false.
What is the difference between professional liability versus general liability insurance?
While both insurance policies seem very similar, there are some crucial differences. General liability insurance covers your business from physical damages, while professional liability covers financial damages. General liability insurance can sometimes include product liability insurance for manufacturers, retailers, and construction professionals. This type of coverage protects the business from lawsuits over finished work that physically harms a person. Professional liability insurance is focused on lawsuits over financial losses that result from a company’s services or products.
If you’re unsure whether or not your business needs general liability insurance, professional liability insurance – or both – it’s best to speak to an experienced insurance services provider. At Dunham Insurance, we focus on delivering to our clients policies tailored to their unique needs at a competitive price. Contact us today to discuss you’re business’ individual needs.