Difference Between General and Professional Liability Insurance

Is general liability insurance and professional liability insurance the same thing? This is a common question because many business owners do not recognize the reasoning behind purchasing both forms. Both are liability insurance coverage, but there are slight differences that make a big difference. Here’s a closer look. 

They Have Similar Features 
Both professional liability insurance and general liability insurance protect against claims made against your business. They both work to reduce the financial burden your company would have to manage should someone file a lawsuit or a damage claim against the company. They both help to keep your business operational while compensating others in case of mistakes. 

In many cases, they can also be a requirement. Some clients may require that you have both forms of insurance to work with them. This is typical, for example, in government contracts. In that way, having both is important. 

What Makes Them Different, Then? 
The simple answer is that both policies cover different types of risks. Here’s a bit more of a comparison. 

Professional Liability: This form of liability insurance covers negligence related to the advice or professional service you provide. In this case, your “bad advice” or guidance may leave the client with financial loss. Typically, this type of insurance is necessary when you are giving any type of consultation or instruction to another person that may cause them financial loss later. 

General Liability Insurance: Here, the loss is more than just financial. This coverage helps protect against physical injury to a person. It can also apply to physical damage to property owned by the customer. It generally happens during the normal course of business. 

Consider a few examples. Let’s say a client comes into your business and requests that you install a window at their home. Your team does so. The window tumbles out of place, injuring someone at the home. In this case, the homeowner may file a general liability insurance claim for the poor workmanship that caused the injury. 

Perhaps you are a consultant for investors. You provide information that is not accurate or is otherwise flawed. Your clients file a lawsuit against you. Though they have no physical injury, the bad advice caused a loss of money for them.
 
Finding the right professional liability insurance and general liability coverage for your business is important. Work with a professional insurance agent who can help you navigate what’s right for your specific needs.