When it comes to protecting your business, it's essential to understand the distinctions between general liability insurance and professional liability insurance. General liability insurance covers physical risks, such as bodily injury and property damage, while professional liability insurance covers more abstract risks, such as errors and omissions in the services your company provides. It's important to note that general liability covers physical damage, while professional liability covers financial damage. Sometimes, a general liability policy includes product liability insurance for defective products for construction professionals, manufacturers, retailers, and other business owners.
This coverage protects the insured from lawsuits for a finished job that physically harms someone. Professional liability insurance deals with claims for financial losses that result from a person's products or services. It's essential to note that general and professional liability policies exclude coverage for car damage and accidents, even if you injure another person while driving on a job. If this poses a potential risk to your business, consider a commercial auto policy.
General liability insurance is intended to cover damages caused by bodily injuries, property damage, personal injuries, or advertising injuries that arise from business facilities, operations, or products for which your company is legally responsible. It safeguards against common business risks and, if your business has a physical location, many commercial landlords require tenants to have general liability insurance (although the law doesn't require it). General liability insurance protects your company if you or your employees are accused of causing property damage, bodily injury, or damage to the reputation of someone who is not affiliated with your company. Professional liability coverage, or E&O, is important for companies that provide professional services, as they may be subject to complaints from disgruntled customers who feel harmed by the company's actions or inactions.
Since general liability insurance can cover many potential business risks, it's an excellent option for most business owners. Both general liability and professional liability insurance can help protect you against costly business liabilities, but there are key differences in the coverage they offer. The cost of a general liability insurance policy depends on several business factors, including the trade or specialty, the years of experience, and the location of the company.
