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What is the difference between General Liability insurance and Professional Liability insurance?

General Liability insurance and Professional Liability insurance are two of the most common types of business insurance, and while they are both designed to protect your business, they each cover very different types of risks. Let’s explore the similarities and differences between General Liability and Professional Liability insurance.

What’s the same?

The biggest similarity is that both types of cover protect your business from liabilities. General Liability and Professional Liability insurance provide a financial safeguard for your business if faced with a lawsuit. The cost of legal fees and expenses can have a devastating impact on your business’ finances, even if you are not at fault.

These insurances help to alleviate the financial stress that a claim may cause, so you can get back to running your business without the worry.

For many types of businesses, a certain level of General Liability or Professional Liability may be required as part of the contractual agreement before you can start any work for them.

What’s Different?

The main difference between General Liability and Professional Liability insurance is the types of risk they each cover.

General Liability insurance provides protection against any physical injury or damage to a third party, that may arise from your daily business activities. An example is a customer who slips over in a store resulting in injury. The customer then sues the store for damages.

Professional Liability (also known as Errors and Omissions insurance, E&O) protects your business against negligence related claims due to your professional service or advice. For example a consultant is sued for providing bad advice which resulted in the client experiencing a financial loss.

Claims for Professional Liability are usually for a financial loss, where General Liability claims are for physical injury or damages.

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