General liability insurance and professional liability insurance protect businesses against different types of risks.
General liability generally focuses on third party claims involving bodily injury, property damage, and certain related allegations. Professional liability focuses on claims connected to the professional services, advice, or expertise a business provides.
A business can need one of these policies or both, depending on its industry and the work it performs.
What Is General Liability Insurance?
General liability insurance provides coverage for certain third party claims involving bodily injury, property damage, personal and advertising injury, and related legal expenses, subject to the policy terms.
Imagine a customer visits your business and slips on a wet floor. The customer suffers an injury and files a claim against your company.
General liability insurance may respond to that type of claim when the circumstances fall within the policy’s coverage.
Another example involves property damage.
A contractor working at a customer’s property accidentally damages part of the building. A general liability policy may provide coverage for an eligible third party property damage claim.
General liability therefore focuses heavily on risks that can arise from your business operations and interactions with customers, visitors, and other third parties.
What Is Professional Liability Insurance?
Professional liability insurance addresses certain claims related to professional services.
A client may claim that your advice, work, or professional service caused them financial harm.
For example, a consultant provides advice that a client believes resulted in a significant financial loss. The client could make a professional negligence claim against the consultant.
Professional liability coverage can help with eligible claims of this nature, depending on the policy.
This type of insurance is particularly relevant to businesses whose primary product is their knowledge, advice, expertise, or professional service.
General Liability vs Professional Liability
The simplest distinction is the type of claim involved.
General liability generally addresses certain third party claims involving physical injury, property damage, and personal or advertising injury.
Professional liability generally addresses certain claims arising from professional services, errors, omissions, negligence, or mistakes.
Consider a graphic designer.
A client visits the designer’s office and trips over a piece of equipment. The resulting bodily injury claim could fall under general liability coverage.
Now imagine the designer delivers work that contains an error and the client claims that the mistake caused financial losses. That situation may involve professional liability.
The exact coverage depends on the policy wording and circumstances of the claim.
Examples of General Liability Claims
General liability can apply to several common business situations.
Customer Injuries
A customer slips and falls inside your business premises.
Property Damage
Your business accidentally damages property belonging to a customer.
Advertising Injury
A business faces certain claims involving advertising or related personal injury allegations covered by the policy.
Third Party Accidents
A person who is not an employee suffers an injury connected to your business operations.
These examples illustrate why general liability is relevant to businesses that interact with customers, visitors, vendors, and other third parties.
Examples of Professional Liability Claims
Professional liability applies to a different set of risks.
Professional Mistakes
A client claims that an error in your professional work caused financial losses.
Incorrect Advice
A client alleges that advice provided by your business caused them financial harm.
Missed Deadlines
A professional service provider misses an important deadline and the client claims financial damages.
Failure to Deliver a Professional Service
A client alleges that the business failed to provide the service according to the agreed professional standard.
The policy language determines whether a particular claim qualifies for coverage.
Do I Need General Liability or Professional Liability?
The answer depends on what your business does.
A business that works directly with customers or their property may have a strong reason to consider general liability coverage.
A business that provides professional advice or specialized services may need professional liability.
Some businesses have exposure to both categories.
For example, an IT consulting company could face a claim involving damage to a customer’s property as well as a separate claim alleging that professional advice caused financial losses.
Carrying both policies can provide broader protection when a business faces different types of liability risks.
Which Businesses Commonly Need General Liability Insurance?
General liability can be relevant to many types of businesses.
Contractors
Construction companies
Retail stores
Restaurants
Cleaning companies
Landscapers
Photographers
Event businesses
Beauty businesses
Repair businesses
Professional offices
The exact insurance requirements depend on the business, location, contracts, and operations.
A contractor working inside customer homes, for example, faces different third party risks from an online consultant who rarely meets clients in person.
Which Businesses Commonly Need Professional Liability Insurance?
Professional liability can be particularly relevant to businesses that provide advice, specialized knowledge, or professional services.
Examples include:
Consultants
Accountants
Architects
Engineers
Marketing professionals
Technology consultants
Designers
Real estate professionals
Financial professionals
Legal professionals
The terminology can also vary by industry. Professional liability insurance is commonly associated with errors and omissions coverage.
Can a Business Have Both Policies?
Yes.
General liability and professional liability address different categories of risk, so having both can make sense for businesses exposed to both physical and professional risks.
Consider an architecture firm.
A visitor could suffer an injury at the firm’s office, creating a potential general liability claim.
A client could also allege that an error in architectural work caused financial losses, creating a potential professional liability claim.
The two policies address different situations.
How Much Does General Liability Insurance Cost?
The price depends on the business, industry, location, revenue, claims history, coverage limits, and other factors.
NEXT Insurance reports that its customers pay an average of about $19 per month for general liability insurance, although individual premiums vary.
A contractor, restaurant, consultant, and retailer can therefore receive very different quotes.
The average is useful as a reference point, while an actual quote provides a much better indication of what your business will pay.
How Much Does Professional Liability Insurance Cost?
Professional liability pricing also varies according to the profession, revenue, location, claims history, coverage limits, and risk associated with the services provided.
NEXT Insurance reports an average of approximately $20 per month for professional liability insurance among its customers.
A technology consultant and an engineering firm can have very different premiums because their professional risks and potential claim amounts are different.
What Does NEXT Insurance Offer?
NEXT Insurance provides insurance products designed for small businesses and different professional industries.
Its available business insurance products include general liability and professional liability, along with workers’ compensation, commercial auto, commercial property, tools and equipment, and business owner’s policies.
The company also offers coverage options tailored to specific professions, which can be useful when comparing insurance based on the actual work a business performs.
When evaluating a policy, look at the coverage limits, deductible, exclusions, claims process, and certificate of insurance requirements in addition to the premium.
What About a Business Owner’s Policy?
A business owner’s policy, commonly called a BOP, combines certain types of business coverage into one policy.
A BOP can include general liability and commercial property coverage, depending on the policy.
It can be useful for certain small businesses that need both types of protection.
Professional liability is a separate consideration because it addresses risks associated with professional services.
A business that provides professional services may therefore need to consider professional liability alongside its other business insurance.
How Do I Decide Which Policy I Need?
Start by identifying the main risks associated with your business.
Ask yourself:
Do customers visit my business?
Do I work at customer properties?
Could my work damage someone else’s property?
Do I provide professional advice?
Could a mistake in my professional service cause a client’s financial loss?
Do contracts require specific insurance?
Do local laws require particular coverage?
Your answers can help identify the types of policies worth discussing with an insurance professional.
Check Your Client Contracts
Client contracts can have a significant effect on your insurance requirements.
A customer may require you to carry general liability insurance with a particular coverage limit.
Another client may require professional liability coverage before hiring your business.
Some contracts also require proof of insurance through a certificate of insurance.
Review these requirements before purchasing coverage so that your policy matches the obligations attached to your contracts.
The Bottom Line
General liability and professional liability insurance protect businesses against different categories of risk.
General liability generally focuses on certain third party bodily injury, property damage, and personal or advertising injury claims.
Professional liability generally focuses on claims connected to professional services, including certain errors, omissions, negligence, and related financial losses.
Businesses with exposure to both types of risk may benefit from carrying both policies.
NEXT Insurance offers both general liability and professional liability coverage for eligible small businesses, along with several other types of business insurance.
Before choosing a policy, compare the coverage, limits, deductible, exclusions, and requirements that apply to your particular business.
Frequently Asked Questions
What is the difference between general liability and professional liability insurance?
General liability generally covers certain third party bodily injury, property damage, and personal or advertising injury claims. Professional liability generally covers certain claims related to professional services, errors, omissions, and negligence.
Does a consultant need professional liability insurance?
Professional liability can be particularly relevant to consultants because their work involves providing advice, expertise, or professional services to clients.
Does a contractor need general liability insurance?
General liability can be important for contractors because their work can involve customer properties, third party injuries, and property damage. Contractual and local requirements can also influence the coverage needed.
Can I have general liability and professional liability insurance?
Yes. Businesses with both operational and professional risks can carry both types of coverage.
How much does general liability insurance cost?
NEXT Insurance reports an average of approximately $19 per month among its customers for general liability insurance. Individual premiums vary according to the business and policy.
How much does professional liability insurance cost?
NEXT Insurance reports an average of approximately $20 per month among its customers for professional liability insurance. Actual prices depend on the business and coverage.
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