There are certain circumstances where general liability coverage isn’t enough, and you might need to purchase something called professional liability insurance.
There are several differences between general liability and professional liability insurance policies, and understanding those differences can help you determine whether or not it’s necessary to have the latter policy in place.
Here are seven differences between these two types of business insurance policies.
1) The type of business you have
If you have a general business, there are probably some risks that you don’t have to worry about.
For example, if someone slips on the sidewalk in front of your store, they might sue you for negligence or something like that.
But if they slip on the sidewalk outside of your store, they might not sue at all.
However, if you’re a professional service provider such as an accountant or lawyer, then what happens outside of your office may still affect your liability.
Let’s say someone falls down an open manhole cover while walking by your office, but it’s actually owned by the city a circumstance that would be almost impossible to prove was caused by your negligence.
You can be sued for it anyway because you would be negligent for allowing people into harm’s way and/or failing to warn them of this hazard.
2) What is included in each type of coverage
General liability coverage is a relatively inexpensive way to protect your business against lawsuits. If a customer falls on the sidewalk outside of your store, they may sue you for their injuries.
General liability insurance will help protect you in that situation.
Professional liability covers things like lawyer malpractice, doctor errors, or architect mistakes.
It’s not as common as general liability coverage but can be very beneficial if it applies to your line of work.
Professional liability insurance is more expensive than general liability because it provides more protection
breach of fiduciary duty. These are all very important considerations when looking at professional liability vs general Liability.
3) How much coverage you need
If you’re a freelancer or an independent contractor, your professional liability coverage will be more expensive than general liability.
In many cases, you’ll need at least $1 million worth of coverage to be safe. Even if you’re just starting out in the field, it’s always better to have too much insurance rather than too little.
There are different kinds of professional liability: You can get malpractice insurance for doctors and lawyers, but other professions like interior designers or project managers might not require this kind of coverage.
Which protects against wrongful acts like copyright infringement. You can also get policies that protect intellectual property from cyber attacks , and invasion of privacy.
To figure out how much insurance you should get, look at what kind of work you do and how long you’ve been doing it.
An experienced developer would need less coverage than someone who is new to the industry and has never worked on any projects before.
4) The cost of the coverage
There are a number of factors that can affect the cost of your coverage. For example, higher deductibles will lower the cost of your premium.
The type of business you operate may also have an impact on the cost of your coverage, for example, if you are in construction or a trade, you may need to purchase more coverage than someone who is self-employed as an accountant.
You may also want to consider whether or not you have employees. If you do, then workers’ compensation insurance may be something you would like to purchase.
If it is mandatory in your state, this insurance could help protect against medical expenses and lost wages if one of your employees sustains an injury at work.
5) What is excluded from each type of coverage
General liability insurance is designed to protect a business from a broad range of potential accidents, such as fire, theft or even something as simple as someone slipping on an ice patch in the store.
Professional liability insurance is specifically designed to protect professionals who work in the medical, legal, accounting or other professional fields.
These professionals are often at risk for lawsuits stemming from mistakes made in their field of expertise.
Some general liability policies may offer coverage for some professional services, but most do not.
It’s important to know what your current policy covers before you need it so you can make an informed decision about which type of coverage best suits your needs and budget.
Professional malpractice insurance also protects professionals in various industries. They may include doctors, nurses, lawyers, engineers and accountants who have been professionally engaged with clients or patients within a particular time period (typically 6 months).
If they have committed malpractice during that time frame, then this type of policy will help pay for the defense costs related to that malpractice case up until trial stage.
6) How claims are handled
General liability insurance is for individuals or businesses that are engaged in an activity where there is a potential for injury to others.
When a claim is filed, the insurance company has to investigate it and pay any damages up to the policy limits as long as the incident falls within the scope of coverage.
Professional liability insurance protects professionals from claims made by clients, vendors or other parties involved with their business.
The client needs to have been injured while doing something they were hired to do before they can file a professional liability claim.
Insurance policies will have different exclusions such as excludes bodily injury caused by products manufactured, sold or distributed by insured which means that if you manufacture or sell products then your professional liability insurance will not cover bodily injuries caused by those products.
7) The time it takes for a claim to be processed
General liability claims are usually processed more quickly than professional liability claims because they don’t involve a lengthy review process.
As a result, general liability claims can often be processed in under two weeks while professional liability claims may take six weeks or more, on average.
Policies also differ in who pays first: Another difference between general liability insurance and professional liability insurance is who pays first when there’s an accident.
When a general negligence lawsuit arises from an event such as slipping on ice, general negligence law states that you’ll have to pay for your own lawyer before the court will award damages against another party usually the homeowner whose snow removal efforts were less than desirable.
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