Professional liability and commercial general liability insurance are very similar: they both cover legal expenses in the event you’re held liable for a particular type of damage. The difference between professional liability insurance and commercial general liability insurance is the type of damage they’ll cover. Professional liability insurance can cover you in the event you’re held liable for financial loss due to your professional services or advice, whereas commercial general liability insurance can cover you if your business is held liable for bodily injury or property damage.
While commercial general liability is applicable to most businesses, only businesses that provide professional services or advice should have professional liability insurance. So, your business may only require one, or it may require both. Let’s break down exactly what each of these insurance types offer and how you can use them to protect your business and career.
What Does a Professional Liability Insurance Policy Cover?
A professional liability insurance policy (E&O) offers protection in the event you’re held liable by a client or third party for financial loss resulting from professional services or advice you provided or your failure to provide professional services or advice. It covers legal expenses including defense costs, settlements, and awards. Situations where this coverage comes into effect can include:
- Misrepresentation
- Libel or slander
- Negligent act or error
- Inaccurate advice
- Lost documents
- Copyright or intellectual infringement
- Failure to deliver or error by a third party
- Delays
- Administrative error
- Breach of confidentiality
Keep in mind that even if you’re not at fault, you’ll still need to pay to defend yourself and your business’s reputation. Lawsuits can cripple you financially; professional liability insurance helps provide financial security and peace of mind. You may also be required to have this insurance in your contract or by your regulatory body, depending on your profession or industry. Not all situations are covered, including intentional and criminal acts that result in financial loss. You’ll also be responsible for paying a deductible for each covered claim, and policy limits apply (meaning only a certain amount will be paid out across the 12-month policy term, regardless of how many claims are made).
What does a commercial general liability policy cover?
This is the most basic liability insurance for businesses. Commercial general liability insurance covers you in the event someone is injured or has their property damaged and holds your business liable for their losses. Commercial general liability insurance could cover your legal expenses, including defense costs, settlements, and awards. For example, if someone walks into your office, trips, and breaks their wrist, they can hold your business liable for the injury they sustained. A commercial general liability insurance policy would help protect your business’ financial security by covering your legal fees and settlements or awards, if any.
Professional Liability vs. Commercial General Liability Insurance: Which do I need?
In general, every business should have a commercial general liability insurance policy, as third party injury or damages can occur regardless of your industry.
If you provide a professional service or professional advice, you should also have a professional liability insurance policy. Together, these policies work to protect your business in the event you are sued under a variety of circumstances.
EasyCover offers affordable, comprehensive professional liability and commercial general liability insurance. You can also talk to one of our expert insurance brokers if you need help or have any questions about this coverage.
You can also check out all the main coverage services offered by EasyCover below: