General Liability Versus Professional Liability Insurance

Small business owners have a lot on their plates, and navigating the many coverage options for business insurance can sometimes take a backseat to everything else. However, along with running a business comes with a myriad of risks, and it should be a priority for business owners to mitigate those risks.

What is General Liability Insurance?

General liability insurance, commonly known as commercial general liability (CGL), is typically the first type of insurance a business owner will purchase. The coverage provided by a CGL policy protects a business against litigation resulting from common risks associated with running a business. Coverage typically includes tort liability cases such as bodily injury or property damage on the business premises, bodily injury or property damage due to business operations, medical payments, libel, slander and copyright infringement.

General Liability Insurance reimburses for legal expenses such as attorney fees, court costs, settlements and other fees associated with litigation. According to the most recent statistics on tort liability, small businesses bore 81% of business tort liability costs, and $35.6 billion of their total tort costs were paid out of pocket rather than through insurance. Just one lawsuit can cost a small business anywhere from $3,000 to over $150,000, according to a report from the Small Business Association Office of Advocacy. For some small business owners, one lawsuit can put them out of business, so general liability insurance can be a saving grace.

What is Professional Liability Insurance?

Professional liability insurance, also known as Errors and Omissions (E&O) coverage, focuses on liabilities resulting from the actual services a business provides, rather than general business-related liabilities. Many business owners mistakenly believe that professional liability insurance is not a necessary addition to their business insurance coverage. However, what seems like a very small error can turn into a costly and devastating lawsuit for a small business owners. These types of errors can include something as simple as missing paperwork that results in a lost business for a client, who can turnaround and sue the business owner to recoup those funds.

Not only does professional liability insurance protect a business owner from potentially damaging litigation costs, it can also save them some of the hassle of having to defend themselves entirely. This allows them to focus energy on their business, where it is most needed. Some professional liability insurance coverage includes a “right and duty to defend” clause, in which the insurer is obligated to handle aspects of a lawsuit such as selecting a lawyer and dealing with case administration on a day-to-day basis.

Which Coverage Options Are Best For Small Businesses?

Just like no two small businesses are exactly the same, not all general and professional liability policies are created equal. American Team Managers Insurance Services understands this, and works to provide customizable insurance policies that ensure businesses get the right policy to fit their individual needs.

 

About American Team Managers Insurance Services

Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.

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