General Liability vs. Professional Liability Insurance

General liability covers business-related incidents that result in bodily injury to a third party. This can include a customer slipping and falling on your premises or an employee accidentally dropping a toolbox on someone’s foot. Of course, this coverage only applies to non-employee injuries.

Additionally, general liability protects any third-party property damage resulting from your business operations. For example, a landscaper’s policy may cover a stone that kicks up from their lawn mower and breaks a client’s window.

General liability insurance coverage includes liability protection for both products and completed operations exposures. Products are any goods that you manufacture, sell, or distribute in your business. If a product causes physical injury or illness, such as a customer becoming sick from undercooked food, a business can find protection under this coverage.

Alternatively, completed operations protect against faulty services or work performed by a business. A project must be fully complete for coverage to apply. For instance, a customer hires a plumber to install a shower drain as part of a bathroom renovation, but the plumber didn’t seal the drain properly and the bathroom flooded days later. The plumber’s general liability policy can cover up to his liability limits for his faulty workmanship since the incident occurred after he left the premises.

Not all injuries are physical. Any written or verbal communications that cause harm can also be covered under your general liability policy. This encompasses libel, slander, malicious mischief, and copyright infringement, to name a few. For example, a small business retailer suffers a decrease in business after a local competitor starts a rumor about their bad customer service. The small business owner can sue the competitor for personal and advertising injury for damaging their reputation and profitability.

Medical payments cover any non-employee medical or funeral-related expenses for which your business is responsible. Of course, your coverage depends on your selected limits. For example, a shelf falls on a customer while they’re grocery shopping. Their medical expenses total $10,000, but the grocer’s liability insurance covers only $5,000 toward medical payments. In this case, the store would be responsible for paying the remaining $5,000 out of pocket.

General liability coverage typically includes coverage for any damages to non-owned land, buildings, or structures. The insured, or their business, must be legally liable for the damages for coverage to apply. For instance, a local restaurant rents a property that catches fire due to a negligent employee leaving a frying pan unattended. General liability might cover the damages since the business caused the fire. In contrast, this coverage wouldn’t apply if a lightning strike started the fire.

Professional liability insurance covers claims of actual or alleged negligence that arise from providing professional services, like giving incorrect advice, an omission, or failing to deliver a service. This coverage includes damages and defense costs up to your policy limits, regardless of whether a mistake was made.

For example, a client claims an accountant filed their taxes incorrectly and caused them to lose a lot of money. The accountant’s professional liability insurance could help cover the legal and settlement costs.

Any business that sells a professional service or gives advice should consider professional liability insurance to protect against lawsuits that arise from their mistakes.

Some states legally require that certain professionals, such as lawyers, have it before they can do business. Clients might also require that a business carry a certain amount of professional liability as part of their business contracts.