Your auto insurance doesn’t cover your house, even though they’re both types of property insurance. Likewise, your general liability insurance doesn’t cover your professional liability exposures, even though they’re both types of liability coverage for businesses. Although general liability and professional liability might sound similar, they actually cover very different risks.
What is general liability?
General liability insurance covers various claims related to physical harm allegedly caused by your business or by the neglect of your business. These claims involve third parties, such as clients and customers, and can include:
- Payments for injuries on your premises
- Damage to others’ property
- Damages caused by your products
General liability insurance is appropriate for many businesses of all different sizes, whether you’re in construction, food, hospitality or any other industry where clients or the general public have access to your premises, or where third-party injuries or damage to others’ property is possible.
What is professional liability?
You may be familiar with professional liability by its other name: errors and omissions (E&O) insurance. Unlike general liability insurance, professional liability insurance covers claims of financial loss resulting from negligence, oversights or errors associated with professional services.
For example, if you forget to file an important form, fail to notify a client of a key issue, make a miscalculation or commit some other error that results in financial loss, you could face a professional liability lawsuit. In such a situation, professional liability insurance would help cover the cost of defense, as well as judgements or settlements.
Even professionals who work diligently to avoid problems may make an occasional mistake. Furthermore, even professionals who have done nothing wrong could face a lawsuit, and court costs can be expensive. This is why professional liability insurance is important for any professional who provides services that could impact a client’s financial situation. This includes people who work in real estate, engineering, insurance, financial services, technology, business consulting and most other professional industries.
Case in point:
An engineering firm with a downtown office that is accessible to clients and other members of the public, needs general liability insurance in case of an on-premises injury, such as a slip and fall. That engineering firm also needs professional liability insurance to protect against the risk of professional error. What if an engineer makes a mistake which results in a building collapse later on?
Most firms that provide professional services have similar dual liability exposures.
Do I need both coverages?
If you have both types of risks, then yes, you do need both types of insurance. Additionally, in some cases, an employer or client may require you to carry professional liability, general liability or both as a condition of your contract. If you have questions about the types of liability coverage you need, contact your Heffernan Insurance agent.