Insurance Insights
from Apollo

November 23, 2018 David Dyck

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

David Dyck

Nov 23, 2018

What is the difference between Professional Liability and General Liability insurance

Some people wonder: “What’s the difference between Professional Liability and General Liability insurance?” It’s a question that’s worth exploring, because any small business owner wants to know that they are getting the right insurance for the right risks that their business faces.

The important thing to remember is that the landscape of risk for small business is large and varied, and the costs for those risks can be large.

Some of those risks are to your business, property, any employees you have, as well as anyone who comes into contact with your business and employees. Those are the risks covered by your General Liability insurance policy. On the other hand, Professional Liability insurance — also known as Errors and Omissions (E&O) insurance — is designed to cover risks specific to the profession or situation.

What General Liability covers

More specifically, a general liability policy insures against claims of property damage or personal injury, sustained by a third party (in other words, someone outside of your business). General Liability insurance covers legal fees, settlements, and property damage.

For example, if someone is visiting a store, and claims to have slipped and fallen on the floor, and is injured, the business’ General Liability policy could respond to cover the damages.

What Professional Liability covers

Professional Liability insurance, or E&O insurance, is designed to cover negligence related to the professional services given. Generally speaking, it is a claim involving financial damages, rather than a claim of physical injury. Professional Liability insurance applies to professions where a certain standard of service is expected.

As an example, an accountant who makes a mistake filing a client’s taxes, resulting in financial loss for their client could result in a claim against the accountant. This is where a Professional Liability insurance policy would respond.

Either a general liability or professional liability claim could be devastating for a small business. And it is important to note that the allegations do not have to be true to be financially damaging.