If you’ve just launched your first business, it can be overwhelming to understand what insurance policies you need for you and your business to be protected. The right policy for your business will depend on the types of risks your company faces. If you’re still unsure about the differences between professional liability insurance vs general liability insurance, then this is the article for you. We’ll cover what is general liability insurance, what is professional liability insurance, who should take out general liability insurance, and who should take out professional liability insurance. Keep reading to learn more!
What is General Liability Insurance?
General liability insurance helps protect your company from the most common lawsuits that many businesses would face. This type of insurance helps cover you in case of a lawsuit over bodily injury that occurred on your premises, damage you caused others’ property, and advertising injuries such as libel, slander, or copyright infringement.
General liability insurance pays for the legal expenses that result due to third-party lawsuits. This could include things like court costs, settlement, attorney’s fees, or judgments. No matter how big or small your business is, could come up against these claims.
What is Professional Liability Insurance?
Sometimes referred to as “errors and omissions insurance” or “malpractice insurance”, professional liability insurance specifically protects you from lawsuits that arise from professional services your business provides. While this type of insurance is especially important for businesses that provide services, small business owners, in general, can also benefit from this type of insurance policy. This is because professional liability insurance protects you from lawsuits like providing substandard or incomplete work, failing to uphold contractual promises, providing negligent professional services, or your business making mistakes or omissions.
Who Should Take Out General Liability Insurance?
General liability insurance is important for really any business owner. This is because it helps protect you from risks that are common to just about every business situation. Professional liability insurance is aimed more at service providers. Some states may even require you to take out professional liability insurance, so be sure to double-check, especially if you are providing a service like a home inspector or an accountant. In most cases, you will need both policies to adequately protect your business from the high costs of unexpected lawsuits. There are some cases where you may be able to avoid having one policy or the other, but this is generally not advisable as you never known when there may be an accident in your business, or a client accuses you of not fulfilling the terms of your contract.
How Much Does General Liability Insurance Cost?
The cost of general liability insurance will depend on a few key factors including:
- Years of experience – Businesses that have been around longer typically pay a lower rate than new businesses.
- Your location – If your business is in an area that has a high risk of storms or floods, this will affect the cost of your policy.
- Type of business – Certain industries, like construction, typically face more risks and may pay more for their policy.
The cost of professional liability insurance is also variable, but your insurance provider may consider things like:
- Your years in business
- Your location
- Your claims history
- Your type of business
- The policy coverage limits
- The number of employees you have
If you still are unsure about what insurance policies your business needs, it’s best to speak to an experienced insurance provider. At Dunham Insurance, no matter what type of insurance coverage you need, we take the extra time to ensure that you completely understand your coverage and that it fits your needs perfectly. Get in touch today to discuss your unique insurance policy needs!