General Liability Insurance and Professional Liability Insurance are both important components of business insurance.
But which policy addresses the risks you face?
Here’s how you can tell the difference.
General Liability covers a Physical Incident
A Commercial General Liability Policy can provide the insurance protection needed to pay damages for bodily injury or property damages for which you are legally responsible. It can protect your business against general lawsuits that any business could face.
Essentially, it kicks in when a third party (anyone who doesn’t work for you business) sues for:
-
Bodily or personal injury on company property
-
Damage your company caused to their property
-
Advertising injuries:
-
Slander and Libel- spoken or written defamatory statements
-
Misappropriation- unauthorized use of information
-
Copyright infringement
Examples:
-
Third Party Bodily Injury If a person is injured on your business property, they may make a bodily injury claim against your business. For example, a package delivery man trips on loose carpeting in your accounting office, falls and breaks his wrist. General Liability Insurance can help cover the costs of the bodily injury claim he makes against your business for this accident.
-
Third Party Property Damage If you or someone on your payroll damages a third party’s property, you may face a property damage claim. General Liability Insurance can help cover the costs of property damage claims made against your business. For example, an employee using equipment on your business property accidentally damages your neighboring business’s office. The neighboring business makes a property damage claim against your business. General Liability Insurance can help cover the costs to settle this property damage claim.
-
Advertising Injury General Liability Insurance can help cover the costs of a claim made against your business because of its advertising practices. For example, a business in the same industry as yours makes a claim that your advertising looks too similar to theirs and is infringing on their business. General Liability Insurance can help cover the costs your business will incur to deal with this claim.
FAQs:
-
Is Commercial General Liability Insurance Required by Law? No, Commercial General Liability Insurance is not required by law. However, most businesses do not have the financial capability to survive a large liability claim against them. Four out of 10 small businesses will experience a claim in a 10 year period.
-
Will General Liability Insurance cover incidents with people on my payroll? No, it does not cover workplace injuries that happen to employees or other people on your payroll. Such incidents are typically covered by Workers’ Comp.
Professional Liability Insurance aka Errors and Omissions (E & O) covers a Financial Incident
Even if you’re an expert in your business, you may make a mistake And if the client or customer thinks the mistake impacted them financially, you may be sued. Professional Liability Insurance covers the cost of negligence as it applies to the professional service you provide.
It can cover claims such as:
-
Errors in professional services your business provided
-
Failure to uphold contractor promises
-
Incomplete work or work not done to expectations
-
Negligence
-
Misrepresentation
-
Inaccurate Advice
Example:
If you are an accountant or bookkeeper and make a clerical error that costs a client thousands of dollars or if you work as a photographer and accidentally damage a client’s wedding photos – claims in these situations could have costly legal repercussions. Professional liability insurance will help cover the costs and fees associated with resolving such incidents, including legal fees and damages awarded.
FAQs:
Who needs to have Professional Liability Insurance? Many types of businesses need professional liability insurance. In some states certain kinds of professional practices are required to carry professional liability insurance. In other cases, a client may require a business to have professional liability insurance as a condition of a contract to do work. If you work directly with customers by providing services, consider a professional liability insurance policy. A customer or client can sue even if you’ve done nothing wrong.
How do I find the best insurance provider for my needs? Look for an independent agent. Direct writers work exclusively for one insurance company while independent agents work for the insured. Here at Midwest Certified Insurance Agency, we partner with many top-rated insurance companies to offer you more options and provide coverage with a carrier tailored to meet your specific needs.
Would you like to find a policy that works for you?
Midwest Certified Insurance is here to help!
Contact us at 847-640-8000 for assistance.
