General Liability and Professional Liability cover different risks.
Only General Liability can protect your business from lawsuits resulting from a visitor slipping and falling on your property or property damage cause by your everyday business activities.
Only Professional Liability can shield you from the cost of alleged professional mistakes that cause a third party (someone that doesn’t work for your company) financial loss.
A good rule of thumb is General Liability covers physical damage and bodily injury, while Professional Liability covers losses from you failing to do your job properly.
Some examples of both coverages:
A Construction Company:
A GL policy for a contractor will protect the business against a client slipping and falling at their offices or at their worksites. If materials or tools that the contractor is using falls off a roof or elevated space and hits a non-employee that is walking by, the GL policy will protect the business against injuries or lawsuits. The GL can also have protection if the building or office you rent is damaged by your business.
Professional liability would protect a contractor against faulty work, where issues come up after the work has been completed and the company has left the work site. Let’s say a concrete floor was ripped up and replaced by your company, months after the work has been completed, the floor cracks or breaks apart and has to be fixed or even fully replaced, the professional liability policy would pay for this mistake.
Diving a little deeper, if someone tripped, fell and was physically hurt because of these cracks in the floor, the companies GL would respond if it includes “products completed operations liability”, the difference here is the actual physical injury vs a monetary loss, after the work has been completed.
An Accounting Firm:
The same as above, the GL protects the insured from everyday business activities that cause actual bodily injury or property damage. The GL for an accounting firm would cover any physical injuries a client or non-employee suffers while in your office or on your business property. Any medical bills or lawsuits involving these injuries or damage, your GL policy would have coverage.
Professional liability insurance for an accountant protects against errors, negligence or omissions caused from the work the account does, like poor advice or a clerical error that costs a client money.
Both the GL and the PL policy can help cover your defense costs related to these lawsuits.
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