Protecting your business is important. That’s why you need liability insurance. But what kind of liability insurance should you be getting?
There are two types of liability insurance for you to consider:
- General Liability Insurance
- Professional Liability Insurance
You might think you just need to get one of these liability insurance policies. However, it’s important to know that there are differences between the two. There is no crossover between them. And each one covers something that the other doesn’t.
General Liability Insurance
General liability insurance covers your business if you’re accused of causing property damage, bodily injury, or reputational harm to someone not affiliated with your business. Let’s look at these coverages in more detail.
Bodily injury covers a situation in which a person is injured, and your business or employee is responsible. For example, if someone slips and falls because your sidewalk outside is icy and hasn’t been treated.
Property damage covers a few different scenarios. Here are some examples.
- You’re a contractor and you drop a tool and cause damage to another contractor’s finished work.
- You’re a painter who has over-sprayed onto a neighboring structure.
- While you’re making a delivery you drive back into a customer’s car.
Reputational harm covers your business if you’ve experienced something like slander or libel. This includes any event or accidental use of false or offensive information in marketing that can affect your reputation.
Reputation insurance can be a standalone product, but it’s typically used more for large businesses. But general liability insurance can include something for reputation. You’re more likely to see reputational risk insurance with a good cyber liability insurance policy.
General liability insurance helps protect your business against these common risks. And if you have a physical location, even if you’re leasing, it can be required (although not by law).
General liability insurance is usually inexpensive and easy to get. Most providers include general liability insurance in their business policies.
Professional Liability Insurance
Also known as errors and omissions insurance, professional liability insurance works like a warranty on a provided service. It can cover mistakes that a business or employee makes. Professional liability insurance issues include bad advice, negligence, missed deadlines, or incomplete work and it’s not available for all types of businesses.
It’s helpful for contractors because it can help in the instance that a customer doesn’t feel that the work was done to their satisfaction. Professional liability insurance issues include bad advice, negligence, missed deadlines, or incomplete work.
Many people know about malpractice insurance, a type of professional liability insurance. But other types of business may benefit from professional liability insurance and not even realize it.
For example, professional liability insurance is helpful for contractors and consultants. Larger contractors usually have it, but seldom smaller ones. It’s also relatively new for contractors and consultants – it wasn’t even available for contractors 20 years ago.
Examples of times when you might need professional liability insurance include:
- An employee of a company gives a customer bad advice on a product or service which costs that customer.
- An employee of a company makes a mistake.
- A customer is unhappy with the finished product that a company had provided and wants a refund.
Professional liability insurance is seldom required and that’s because it’s not available for every type of business. However, if you’re providing a service for a fee, you’ll likely need both policies if you want to be fully protected. Professional liability insurance isn’t cheap to get. Much of the cost of which policy you get relates to the size of claims that could be expected to be made.
Professional liability insurance isn’t included in your standard business insurance policy. Because of this, you’ll need to buy it separately.
Contact Chastain Otis to get Liability Insurance
If you need liability insurance for your business or advice about whether your current insurance meets your business needs, then let Chastain Otis help you find the right policy. Contact us today.