There are many insurance products available to small business owners. It can be overwhelming trying to learn the differences between all these options, let alone figuring out which types of coverage you may need.
To help, this article will discuss the difference between Errors and Omissions insurance vs. General Liability. These are two forms of coverage that many business owners consider. Each provides small businesses with important protections against common risks.
What is General Liability insurance?
Sometimes referred to as “slip and fall” coverage, General Liability insurance protects small businesses against third-party claims and lawsuits of bodily injury and property damage.
General liability insurance typically covers your legal fees if a general liability lawsuit or claim is made against you. This may include your attorney’s fees, other court costs, and settlements or judgements. Your policy could potentially save you thousands of dollars in expenses that would otherwise come from your own pocket.
Examples of businesses that often purchase General Liability insurance include:
What is Errors & Omissions insurance?
Errors & Omissions insurance protects you against claims or lawsuits resulting from mistakes, breaches of contract, missed deadlines, and other professional errors in your work. You may see this product abbreviated as E&O insurance.
Errors & Omissions coverage typically pays for attorney’s fees, court costs, and settlements or judgements if a relevant lawsuit or claim is brought against your business. This coverage applies even if the claims made against you are false or without merit. Your policy helps keep you from having to pay these expenses from your own accounts.
Examples of professions that commonly purchase E&O insurance include:
- Accountants and bookkeepers
- Healthcare professionals, nutritionists, and personal trainers
Professional Liability Insurance vs. Errors and Omissions
While searching for Errors & Omissions insurance you may have come across a product called Professional Liability. This is the same type of insurance, just sold under a different name. A Professional Liability policy provides the same protections as an E&O policy, which typically applies to claims of:
- Error, mistake, or omission in your work
- Breaches of contract
- Missed deadlines
- Undelivered services
- Professional negligence
General Liability vs. Errors & Omissions Insurance
As you can see, General Liability and Errors & Omissions insurance are not the same. They address very different risks faced by many small businesses:
- General Liability protects small businesses against outside claims of injury or property damage.
- Errors and Omissions insurance protects small businesses against claims of financial loss resulting from your own work.
However, there are some similarities between these two types of policies. These include:
- Both policies protect businesses from common liabilities. There’s a lot you can do as a business owner to avoid unnecessary insurance claims, but accidents may still happen. General Liability and Errors & Omissions coverage help you handle these situations when and if they do occur.
- Both policies typically cover your legal fees. Lawsuits can be expensive, even those where you are not at fault. General Liability and Errors & Omissions coverage typically pay for your legal expenses, so you don’t have to.
- Both policies may be required to do business. Insurance requirements for small businesses vary from state to state and even between industries. In some areas, you may be required by law to have one or both policies to work in your field. Commercial landlords, clients, and other businesses may also require you to have insurance to work with them.
Do I need both policies?
Both General Liability and Errors & Omissions policies cover common liabilities that many businesses face.
You may consider having General Liability if you:
- Visit your clients’ property
- Handle their belongings
- Meet with third parties in your business space (clients, vendors, delivery people, etc.)
- Have employees who do any of the above
You may consider having an E&O policy if you:
- Provide a professional service or custom products
- Give advice based on your training or expertise
- Represent a client’s interests on their behalf
- Have employees that do any of the above
These policies can complement each other, providing your small business with important coverage against everyday risks.
Find Insurance for Your Small Business
Now that you understand the difference between General Liability vs. Errors and Omissions insurance (and Professional Liability insurance vs Errors and Omissions), you may be ready to find policies that suit your business’ needs. BizInsure makes this process as quick and painless as possible for busy small business owners.
With BizInsure, you can compare quotes from multiple insurers and buy your policies online in minutes. Ready to protect your business? Get quotes for Professional Liability insurance and more now.