General Liability or Professional Liability Insurance?

General Liability or Professional Liability Insurance?

You’ve just started a new business, but which one should you choose: general liability or professional liability insurance? Maybe you’ve made a hefty investment in general liability insurance, which was included in your “package policy”. Your agent has advised that you also purchase Professional Liability Insurance (sometimes referred to as errors and omissions insurance) and you’re wondering if you really need it.

If you’re in a business that provides a professional service or regularly gives advice to your clients you probably need the coverage. If you’re in that kind of business you probably are required contractually by several of your clients to provide proof of that coverage.

There are a few professions where professional liability insurance is so integral to the day-to-day operation that it is readily apparent that they should have the coverage.

Some more obvious industries in need of professional liability insurance:

  • Attorneys
  • Architects and Engineers
  • Beauty and Barber Shops
  • Medical Professionals and Hospitals
  • Morticians
  • Real Estate Agents
  • Insurance Agents

But nearly every service has some aspect of professional liability involved in their operation.

Some less obvious industries in need of professional liability insurance:

  • Agricultural consultants
  • Answering services
  • Arbitrators
  • Association service
  • Auctioneers
  • Benefit plan consultants
  • Billing services
  • Broadcasters
  • Business associations
  • Business coaches/career consultants
  • Call centers
  • Civic organizations
  • Coaching services
  • Consultants
  • Corporate trainers
  • Cost containment services
  • Counselors
  • County clerks
  • Couriers
  • Court reporters
  • Data processors
  • Document destruction
  • Drug testing services
  • Education counselors
  • Employment agencies and screeners
  • Event planners
  • Executive search
  • Expert witnesses
  • Film editors
  • Foresters
  • Fund raising consultants
  • Grant writing services
  • Graphic designers
  • Interpreters
  • Literary agents
  • Magazines/periodicals
  • Management consultants
  • Marketing consultants
  • Mediators
  • Mortgage originators
  • Music-related media
  • Newspapers
  • Notaries
  • Outplacement services
  • Paging services
  • Paralegals
  • Payroll services
  • Photographic services
  • Polygraph examiners
  • Printers
  • Public relations
  • Publishers
  • Radio/television stations
  • Research organizations
  • Social services
  • Tax consultants
  • Telecommunications consultants
  • Telemarketers
  • Temporary help services
  • Testing labs
  • Tour operators
  • Translators
  • Travel agents
  • Trustees
  • Tutors
  • Typing services
  • Website developers

A General Liability Policy generally excludes bodily injury and property damage arising out of the rendering or failing to render a professional service, necessitating the consideration of the purchase of Professional Liability Insurance.

Consider the plight of the midwife or obstetrician. Child birth is a natural act that has been going on for as long as there have been babies. When something goes wrong resulting in injury of death emotions run high. People seemingly forget that babies do sometimes have troubled births. Even though the number of deaths per thousand are less than 1% when that baby is yours the figures are meaningless.

People seemed to think something went wrong and someone has to be at fault. Professional liability premiums for midwives and obstetricians are very high even though they’re obviously not as a class any less “professional” than other caregivers.

Their problem exemplifies the need for professional liability insurance.

If your customer for service believes they are your “client” you need professional liability coverage. A customer is a person or organization that buys goods or services from a store or business. A client is a person or organization using the services of a lawyer or other professional person or company.

If you purchase professional liability you will need to understand claims-made coverage. You need to have a complete discussion with your insurance agent so that you understand the retro date, claims trigger, and tail coverage.

Other Enhanced Insurance articles related to Professional Insurance:

Attorney’s Professional Liability Insurance

Errors and Omissions and Professional Liability Insurance for Independent Agents

Professional Liability / Errors and Omissions Insurance

Professional Liability Insurance for Veterinary Businesses

Veterinarian Professional Insurance

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

Jim operates an insurance agent network called Insurance Partners, aggregating agents in the Midwest for over 25 years. He was National Agent of the Year for Metropolitan in 1993 and Midwest Agent of the Year for Travelers in 2011. He served as a founding board member of the Surplus Lines Association of Minnesota.

Leave a Comment

Your email address will not be published. Required fields are marked *