One of the most underrated yet critical decisions you face when starting a small business is selecting the right insurance coverage. Every business is unique, and choosing the right coverage for your needs is vital to success.
Two of the most common types of insurance coverage for small businesses are General Liability Insurance and Professional Liability Insurance. The most significant difference between these two is that Professional Liability Insurance focuses on claims made for financial risks. General Liability Insurance is more concerned with physical risks, such as accidents at work.
Let’s examine the protections of each type of coverage and consider what kind of business they might be suitable for…
General Liability Insurance
This type of coverage guards businesses against several claims, including injuries and property damage. It is necessary for businesses that interact with clients, customers, or the public, such as retail stores, restaurants, or contractors.
Examples of General Liability Insurance Claims:
Bodily Injury – If you are found liable for an injury on your premises, general liability insurance can cover damages, legal costs, or medical costs.
Property Damage – General liability insurance can cover repair costs if your business damages someone else’s property, such as if a contractor causes property damage while working on a project.
Personal Injury – This coverage protects against claims of libel, slander, harm to one’s reputation, and copyright infringement.
Professional Liability Insurance
This type of coverage guards businesses against financial risks from claims arising from professional services or advice. It covers claims of negligence, errors, or omissions when performing professional services. This type of coverage is necessary for businesses that provide professional services or advice to clients, such as lawyers, doctors, accountants, or architects.
Examples of Professional Liability Insurance Claims:
Professional Negligence – This can include mistakes, oversights, or failure to deliver services as promised.
Claims for Damages – Coverage for damages awarded to clients or third parties due to negligence or errors in your business’s services.
Copyright and Intellectual Property Claims – Some professional liability policies may include coverage for claims of copyright infringement, plagiarism, or other intellectual property violations related to professional services.
Incomplete or Substandard Work – This type of claim may arise if a client doesn’t feel the work they paid for is up to their standard.
When deciding on coverage for your business, we recommend working with an insurance expert! Our team is ready to assist you with speedy advice (and an even speedier quote).
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Reference list: OpenAI. (2024, April). [How do you know if you need general liability insurance or professional liability insurance for your business]. Retrieved from [ChatGPT.com].
