If you’re in the market for business insurance, you will likely have some questions about what kind of liability insurance your business needs. The first step in figuring out what coverage is right for you is to learn about two of the primary types of business insurance: professional and general liability coverage. Once you understand the difference between these two types of business insurance, you can work with a business insurance professional to decide exactly which type and how much coverage your business requires.
General Liability Coverage
As its name suggests, general liability insurance protects your business from “general” lawsuits that may be filed against you. A general liability plan could provide coverage for situations involving personal injury claims, property damage, accidents, and other common liability issues. There is a wide range of circumstances that can result in liability claims. Some common examples could include:
- If a vendor is delivering goods to your business, and one of their employees falls on your uneven flooring, the resulting claim would likely be covered by a general liability insurance policy.
- If your employees are installing a product at a customer’s house and they damage their property in the process, a general liability insurance should cover the customer’s loss.
- If someone employed by your business makes an untrue statement about another person, and that person sues for the financial harm that they suffered due to that statement, it may be covered by a general liability policy.
Sometimes, general liability coverage may not be enough. Should a business decide that more expansive protection is required—umbrella liability insurance can be added to existing general liability coverage.
Claims Can Happen—Liability Coverage Can Help
Because these types of claims can happen to any business, regardless of the size or industry, it is a good idea for all business owners to have general liability insurance. These policies will generally pay for expenses related to a liability lawsuit or claim, including attorneys’ fees, medical expenses, property damage, court costs, and any settlements or judgments rendered against your business. A business insurance professional can help to determine what risks your business is exposed to and the amount of coverage required to protect against these risks.
Professional Liability Coverage
In contrast, professional liability insurance covers claims specifically related to providing professional services. Professional liability coverage plans can have different names/structures depending on the profession. In many cases, professional liability coverage is known as errors and omissions insurance, or E&O. Most small business owners will benefit from professional liability insurance, as it can shield you from claims that you provided negligent services, performed shoddy work, failed to uphold your part of the contract, or made mistakes in your work. These claims can arise in any number of scenarios, across all industries.
Industry Specific Professional Liability Coverage
An example of professional liability coverage that is specific to a profession is malpractice insurance. A doctor or lawyer could be sued for professional malpractice for missing a diagnosis or failing to file a claim on time. Some professionals, such as physicians, can elect malpractice coverage for protection against certain claims. A contractor could be sued if a roof that he installed leaks. An accountant could face a lawsuit for making a mistake in a client’s taxes. A client of an adoption agency could sue if an adoption plan fails. A courier service could be sued if important documents are not delivered on time. Although there are numerous liability risks for professionals, comprehensive liability coverage can help to protect from exposure to common risks.
Liability lawsuits can arise whenever a customer/client feels that a business is at fault. The cost of managing these claims can vary but in many cases can be incredibly expensive. In general, professional liability insurance will cover the cost of these lawsuits, including legal fees and awards or settlements. These cases usually involve claims of financial harm, and are often decided based upon a professional code of conduct or standards.
State Requirements May Vary
In many states, professional liability insurance is required for certain business (such as malpractice insurance for physicians). If you are not aware of your state’s requirements, it is recommended that you consult with a business insurance professional who can provide guidance on the matter.
Utilizing Professional and General Liability Coverage
There are many situations in which companies should purchase both types of liability coverage. This is because general liability and professional liability insurance protect against different types of risks. For example, a general liability policy can protect your business if a customer falls in your store, but a professional liability policy will cover you if a client claims that you made a mistake in providing services. These policies can work together to ensure that a business has coverage for the various types of lawsuits that could potentially arise. Additionally, it is not uncommon for either or both types of insurance to be required by client contract.
Contact Us Today for More Information!
Liability coverage is essential for growing and established businesses in order to remain protected against damaging claims that may arise. If you are in the market for business insurance, contact the Business Benefits Group by giving us a call or sending us a message online today to discuss your options. Our experienced business insurance professionals have decades of experience and can make sure that your business is equipped to manage any circumstance that it may encounter.