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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 and commercial general liability is the type of damage they’ll cover you for: professional liability insurance can cover you in the event you’re held liable for financial loss due to your professional service or advice whereas commercial general liability insurance can cover you if your business is held liable for bodily injury or property damage.

All businesses require commercial general liability insurance whereas only businesses that provide a service or professional advice require professional liability insurance. So, your business may only require one or it may require both. We’ll break down what exactly these insurance coverages offer.

What does a professional liability policy cover?

A professional liability policy offers protection in the event you’re held liable by a client or third party for financial loss as a result of your provided professional service or advice – or failure to provide it. It covers legal expenses including defence costs, settlements, and awards.

Situations 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’ 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 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. It covers you in the event someone is injured or has their property damaged and they hold your business liable. Your commercial general liability insurance could cover your legal expenses, including defence costs, settlements, and awards. For example, if someone walks into your office, trips, and breaks their wrist, they can hold your business liable for their damages. A commercial general liability insurance policy would help protect your business’ financial security.

Professional Liability vs. Commercial General Liability Insurance: Which do I need?

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.