Most people know that when you own a business, you are going to need insurance to cover and protect it. Often the term General Liability and Professional Liability are confused. General Liability helps to cover the cost of damages and lawsuits if your business is held responsible for things like property damage or bodily injury. Professional Liability helps cover the cost of claims relating to errors or omissions that can occur when giving advice or providing services.
The major difference between General and Professional Liability are the types of claims that they cover.
General Liability will cover claims made from accidents on your businesses’ property, damage that was done to someone else’s property or advertising mistakes.
For example:
- Customer slips on a wet floor in your store, they claim they were injured because your store is not safe.
- You are working on a jobsite and damage the neighbor’s lawn; the neighbor could make a claim against your business.
- A photograph you use in your advertising is copyrighted by the photographer. You thought the photo was public domain but the photographer is making a claim.
Professional Liability Insurance which can also be known as Errors & Omissions (E&O) Coverage, covers the cost of claims that are made against your business due to errors or omissions giving advice or services.
For example:
- A photographer takes photos of a couples wedding ceremony. While developing the photos the photographer accidentally destroys the film. The married couple would make a claim against the photographer for errors in their service.
- An accounting firm miscalculates its numbers when preparing a return for a client. This miscalculation costs the client nearly a million dollars and the client make a claim.
It is important to consider adding Professional Liability Insurance to your business insurance policies if you offer advice, service or products. Clients or customers can make a claim against your business even if you have done nothing wrong and the cost can range from thousands to millions. Without Professional Liability Insurance your business could be on the hook for paying legal fees, settlement and damage costs out-of-pocket.
