A comprehensive business insurance policy ensures that your business is financially secure in the event of losses from a wide range of potential risk factors. A business insurance policy includes two liability coverages, general liability, and professional liability coverages. Both cover different types of risk factors that may result in lawsuits. While general liability is needed by all businesses, whether you should buy professional liability depends on your specific business type.
In this blog, you will learn about both these coverages, their similarities, and differences, and whether your business needs both insurances.
General Liability Insurance
All businesses must have general liability insurance. Even after ensuring that all safety protocol is being maintained by your business, accidents may happen. To stay covered in such situations, you need general liability coverage for your business. It covers:
- Bodily injuries that happen within your business property
- Damage to someone’s property
- Advertising injuries such as claims of libel, slander, copyright infringement, and misappropriation
It also pays for the legal expenses that you may incur if the person sues you. It includes:
- Your lawyer’s fees
- Court expenses
- Settlement amount if the court rules in favor of the plaintiff.
Professional Liability Insurance
If you are a financial consultant, insurance provider, engineering firm, doctor, lawyer, or your business offers professional services or advice to clients, you must buy professional liability insurance. Also known as errors and omissions insurance or malpractice insurance, it protects your financial interests when faced with lawsuits from a dissatisfied client. The insurance covers claims related to your professional services, such as:
- Substandard service
- Errors or incidents of negligence
- Missed deadlines
- Services not provided
- Breach of contract
Professional liability-related lawsuits can be expensive and especially damaging for small businesses without adequate coverage. With the number of lawsuits on the rise with clients trying to compensate for their losses from businesses providing the service, even if they are not at fault, having insurance ensures that your litigation and other associated expenses are covered, and you are financially secure.
General Liability and Professional Liability Insurance: Similarities
While they are two different types of insurance coverage, there are some similarities too, such as:
- Both protect businesses from the expenses involved in lawsuits
- Both policies may be an essential requirement for your business to have for signing a contract
General Liability and Professional Liability Insurance: Differences
The major differences between general liability and professional liability insurance are:
- Different scopes of coverage: Professional liability insurance is strictly for service-related claims by clients
- Type of damage covered: It’s third-party physical injuries and damages for general liability insurance and financial damages for professional liability insurance.
Which Policy Works the Best for Your Business
Being protected against all possible risks that have the potential to develop into lawsuits must be your mantra as a small-business owner. Even a single expensive lawsuit can prove disastrous and, in many cases, has been the reason for businesses shutting down.
Your scope of work and the unique risks that your business faces must determine whether you buy either or both the liability coverages.
Cover Your Business with Reardon Insurance
For more information on business insurance coverage, contact our team today. At Reardon Agency Insurance, we can help you to get the best-suited and most comprehensive insurance coverage for your business.
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