General Liability vs Professional Liability: What’s the Difference?

Owning a business comes with risks, including those that are physical and those that are intangible. These risks have the potential to significantly impact you, your employees, and your company; thus, it is important to make sure you are properly covered. 

Two important insurance policies that you should be aware of as a business owner are general liability insurance and professional liability insurance. Understanding the difference between these two forms of insurance is essential for making sure your business is properly protected. 

General Liability Insurance

General liability insurance is a foundational form of business insurance that protects against the many day-to-day risks a company could potentially face. It focuses on third-party claims involving physical injuries, property damage, and certain legal issues.

It is designed to help businesses handle unexpected events that can happen during normal operations and protect them against compensation claims for business-related incidents.

What Does General Liability Insurance Cover?

While your coverage could depend on your specific policy, it usually covers a few common areas:

1. Bodily injury applies if a customer or other third party is injured because of your business. It usually pops up if someone gets hurt at your place of business or as a result of your work. Your insurance should cover legal fees, settlement costs, and medical expenses.
2. Property damage applies when your business accidentally damages someone else’s property, which includes buildings, equipment, and personal items. Your policy usually covers most, if not all, of the costs associated with fixing or replacing what was damaged.
3. Advertising injury protects against claims related to how your business advertises or promotes itself. It includes accusations of false advertising and copyright infringement. 
4. Personal injury addresses non-physical harm, like libel and slander. These claims often come up because of written or spoken statements that damage a third party’s reputation.

Who Needs General Liability Insurance?

Business owners who have professional licensure or deal with contracts or office leases typically need general liability insurance. Common businesses that benefit from this type of insurance include:

• Businesses that rent offices or workspaces
• Companies that hire general contractors, engineers, or landscapers
• Dentists and medical offices 
• Real estate professionals 
• Trade professionals, such as electricians 

Professional Liability Insurance

Professional liability insurance protects against claims related to your expertise, services, or advice. This coverage helps protect businesses if clients claim they suffered financial loss because of a mistake.

Professional liability insurance is especially important for businesses whose clients rely heavily on accuracy, expertise, and professionalism. It can protect against accusations of failing to perform your job correctly and potential oversights on your company’s side.

What Does Professional Liability Insurance Cover?

Professional liability insurance usually covers a few specific areas, with the most common including:

1. Advice: If your business provides professional advice, recommendations, or guidance, this coverage protects your company if the client claims that the advice led to financial harm. If a client believes advice led to lost revenue, for example, legal fees and settlements could be covered.
2. Professional Services: This coverage applies directly to the service you provide. If a client claims your work was inaccurate, incomplete, or failed to meet professional standards, your insurance helps cover the resulting judgment.

Who Needs Professional Liability Insurance?

Professional liability insurance is key for service-based businesses and professionals spanning multiple areas, like:

• Accountants 
• Architects and developers
• Attorneys and law firms
• Consultants 
• Designers
• Engineers
• Financial advisors 
• Insurance agents
• Physicians 
• Real estate professionals

Any business where a mistake could result in financial loss for a client should strongly consider professional liability insurance.

Understanding the Difference

The main difference between general liability and professional liability insurance is the type of risks they cover. General liability insurance mainly addresses physical and tangible risks, like injuries and property damage.

Professional liability insurance, on the other hand, covers intangible risks. This includes mistakes, negligence, or errors related to the professional services you offer. The differences between the types of insurance can best be seen this way:

• General Liability: A visitor trips and falls inside your office. General liability insurance should help to cover their medical costs, your legal expenses, and any settlement costs.
• Professional Liability: An accountant makes an error that leads to penalties for a client. Professional liability insurance should help cover defense costs and settlements.

It is worth keeping in mind that these types of insurance aren’t interchangeable. One cannot replace the other, as they both cover areas that the other does not.

Idaho Falls Business Insurance

In many cases, businesses benefit from having both types of insurance. Together, they offer broader protection against the most common risks you’re likely to come across. Business owners should understand their insurance options so they can look out for their employees, assets, and long-term operations.

Because every business is unique, coverage should be tailored to your specific risks and budget. At Alpine Castle Lake Insurance, our team works closely with you to understand your specific needs. We help to connect you with insurance options that provide the right balance of protection and affordability.

Reach Out For Local Support

Reviewing your business insurance options is an important step in protecting what you have built, and knowing your general liability and professional liability insurance needs helps make sure you are prepared for both physical and professional risks.

If you have questions or want to explore your coverage options, reach out today. Our team at Alpine Castle Lake Insurance is ready to walk you through your choices and help you find options that suit your needs.