General Liability vs. Professional Liability Insurance: Do You Need Both?
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General liability insurance and professional liability insurance can both protect businesses in case of lawsuits. But they cover different types of risks: General liability is for claims based on third-party property damage and bodily injury, while professional liability insurance covers errors or oversights that result in third-party financial losses.
Here’s a breakdown of these two types of business insurance and how to shop for both.
What general liability insurance covers
General liability insurance protects your business if you or your employees are accused of causing property damage, bodily injury or reputational harm to someone who isn't affiliated with your business.
These policies can cover legal and settlement costs in cases like:
A customer trips on a loose floorboard in your store and suffers an injury.
An employee backs into a customer’s car while making a delivery.
A competing business accuses you of copyright infringement.
What professional liability insurance covers
Professional liability insurance, known in many industries as errors and omissions insurance, protects your business against lawsuits filed by dissatisfied customers who hold you responsible for their losses.
Professional liability insurance policies protect against claims like:
Inadequate or inaccurate work.
Bad advice.
Missed deadlines or incomplete work.
Negligence.
Do you need both types of coverage?
Most businesses need general liability insurance. It protects against common business risks, and if your business has a physical location, many commercial landlords require tenants to carry general liability insurance (though it isn’t required by law).
But general liability insurance doesn't provide coverage for claims of professional mistakes or bad advice. Professional liability insurance fills in those gaps.
If you provide services to customers for a fee — as an accountant or financial advisor, for instance — you should get professional liability insurance and general liability insurance to be fully protected. Certain professionals, including doctors and lawyers, may also be required by law to carry professional liability insurance.
If you have employees or make and sell products, you may need other types of liability insurance as well, such as product liability insurance. Talking to an insurance professional can help you understand and evaluate your level of risk and determine the types of business insurance you need.
How to shop for general and professional liability insurance
Most major commercial insurers provide both general liability and professional liability insurance, but they usually aren’t offered as a package.
General liability insurance is sold on its own or as part of a business owner's policy, which also includes commercial property insurance and may include business interruption insurance. Professional liability insurance isn't included in BOPs and must be purchased as a separate policy.
Getting quotes from multiple insurers for both types of insurance to compare your options can help you find the lowest rates and best coverage for your needs.
