General Liability vs. Professional Liability Insurance

What’s the difference between general liability and professional liability insurance? We get asked this question a lot.

Is one better than the other? What exactly separates general liability vs. professional liability and which do you need?

If you’re looking for answers, we’re here to help. Continue reading to learn more about how general liability and professional liability work.

What’s the difference between General Liability and Professional Liability?

The difference between general liability and professional liability insurance is sometimes confusing for new business owners.

“Liability insurance” is a vague term frequently used in the insurance industry. General liability differs from professional liability mostly by what kind of risk each type of insurance covers.

General liability can cover physical accidents — injuries to people who are not your employees and damage to property that doesn’t belong to you. Professional liability can cover professional accidents and mistakes.

Both types of insurance can provide financial help for lawsuits.

For example:

• If someone sues your business because they needed medical care after slipping and breaking an arm at your business, that could be a general liability claim.
• If someone sues you for overlooking a detail of your plans that causes a financial loss, that’s most likely a professional liability claim.

It’s important to note: The nuances of coverage are different for each business. Continue reading to learn more and read your policy documents closely before making an insurance purchase.

General liability insurance is often known as “slip and fall” insurance.

It provides financial protection if you are held responsible for some of the most common accidents at a business, such as a customer injury (also called “bodily injury”) or damages to someone’s property. It also provides coverage if you are forced to defend an accusation of libel or slander.

General liability insurance covers the risks that affect almost every business, regardless of your industry. It’s one of the most common insurance policies for small businesses and self-employed professionals, and it’s typically the first insurance purchased by new businesses.

What does General Liability insurance cover?

General liability can help to protect your business from unexpected expenses related to injury or damage, including:

Physical injury: Also known as “bodily injury,” this refers to any physical harm caused to someone other than an employee (known as a “third party”).

Property damage: This helps protect against business liability for damage to property belonging to someone else during your work.

Personal injury: This refers to claims for damage to a party’s name or reputation. It’s also called “advertising injury.” It may be in the form of libel, which means written or visual defamation, or slander, which refers to verbal defamation.

Learn more about general liability insurance coverage.

Who needs General Liability insurance?

Here are some examples of business owners who might need general liability coverage:

• General contractors sometimes need general liability as part of the license requirements in their state.
• Fitness instructors need coverage for some certifications, and it’s usually required if they work at a gym.
• Anyone who wants to rent commercial property could be required to have coverage as part of their commercial lease.

How much does General Liability insurance cost?

NEXT offers customized general liability insurance tailored to your business. General liability can cost as little as $11 monthly, but your exact price will be based on your business location, operations and other factors.**

What NEXT customers typically pay for General Liability insurance

50% of our customers pay $25 to $45 per month on general liability insurance.**

Your specific commercial general liability insurance cost will be determined by several factors, such as the type of work you do, your business location, how many employees you have and your claims history.

What is Professional Liability insurance?

Professional liability insurance, also known as errors and omissions insurance (E&O), helps to protect your business against civil lawsuits and negligence claims related to professional mistakes, whether you actually made them or a client just thinks you did.

Mistakes and business disagreements can be costly without the right professional liability insurance.

It’s a common type of insurance for professional services, but many types of businesses, including construction and fitness, also buy professional liability.

What does Professional Liability insurance cover?

Professional liability insurance helps cover damages related to legal expenses or defense costs if your company is accused of work errors or incomplete projects that cause a client to lose money.

Professional liability can help pay for:

• Professional negligence (actual or alleged)
• Legal defense costs
• Legal judgments

Learn more about professional liability insurance coverage

Who needs Professional Liability insurance?

Many businesses need professional liability coverage because it provides protection from unexpected expenses if you’re accused of a professional mistake.

• An accountant makes an error on a client’s tax return.
• A real estate agent misses an item on a disclosure that costs their client money.
• A consultant provides advice that results in a client’s financial loss.

How much does Professional Liability insurance cost?

Professional liability insurance can cost as little as $18.34 monthly, but the exact price you’ll pay depends on your particular circumstances.***

What most NEXT customers pay for Professional Liability insurance

52% of our customers pay between $25 or less to $45 per month on professional liability business insurance.***

Premium costs are influenced by different factors, including your business location, claims history and the type of work you do.

How do General and Professional Liability insurance overlap?

Both types of insurance help to cover accidents and unexpected situations.

General liability and professional liability can both be requested by potential clients before you start a job or rent a space.

For example, clients often ask general contractors and construction professionals if they have general liability before they win a bid. Similarly, accountants and financial advisors are often asked if they carry professional liability.

Examples of how General Liability and Professional Liability are different

Here are some more examples of how general liability and professional liability are different:

1. Timing and when events happen

Professional liability is usually written on a “claims made” basis. Meanwhile, general liability is usually written on an “occurrence” basis.

When something is covered on a “claims made” basis, insurance claims must be made within the active policy period, or it’s not covered. Professional liability works like this because sometimes the starting point of an error is unclear. When does the damage start?

Learn more about the difference between “claims made” and “occurrence” coverage.

2. Services and quality of work vs. physical damage

Professional liability can cover damages related to your professional services. These include financial damages unrelated to bodily injury.

For example, you’re a stockbroker who makes a typo, costing your client a ton of money.

Or you’re a web developer hired to update a retailer’s website for Black Friday. When the big day happens, the site crashes, causing your client to lose out on sales. (It happens to even big retailers.)

These examples are related to work you do as a professional rather than physical risks.

3. Industry/types of business-specific

Professional liability coverage and exclusions are generally more specific to different types of businesses. General liability insurance generally helps cover accidents that can happen with most businesses.

Think of it this way. Many professionals may face similar “slip and fall” incidents. But, they will each face unique financial liability risks when conducting their business. An accountant’s liability will look very different from a real estate agent or construction professional.

For instance, if you’re a carpenter or general contractor, it’s probably not hard to imagine making a mistake that could cost tens of thousands of dollars to fix. But, for a personal trainer, the professional liability claims might be significantly different. They’d be more concerned about a customer getting hurt during a training session.

Are General Liability and Professional Liability policies always separate?

No, a general liability policy can include an endorsement that includes many elements of professional liability coverage.

If that’s the case, make sure you’re getting a policy specific to your business needs so that you can know you’re covered in case of a claim.

When buying small business insurance, read your coverage explanation closely so you know exactly what is covered.

Do I need both types of insurance?

What kind of business do you own? This is the key question for determining what type or types of insurance you might need. Do you physically work on property or do you advise clients — or elements of both?

In many cases, both general liability and professional liability are good to have so you can protect your business as much as possible.

For example, if you are an architect and rent a commercial property that clients and vendors visit, having both general liability and professional liability is a good idea.

Some businesses, of course, don’t need both types of coverage, but without knowing the specific circumstances surrounding a business, it’s hard to say if you could do without one or the other.

The best way to figure out what types of insurance you need (or don’t need) is to start a quote and review recommended coverages. This takes about 10 minutes online with NEXT.

General Liability vs. Professional Liability: How NEXT helps with online options

NEXT Insurance helps small business owners create customized, affordable insurance packages. Aside from general and professional liability insurance, we also offer workers’ compensation insurance, commercial property and business owner’s policy to cover your business.

After answering a few questions, you can buy your policy 100% online and get your certification of insurance instantly.*

Get your instant insurance quote today.