Professional liability vs. general liability insurance
Both general liability and professional liability are types of liability insurance that cover the business risks faced by small technology and IT businesses. They differ in the types of liabilities they insure against.
What is commercial general liability insurance?
General liability insurance coverage protects your small business from lawsuits that any business might face. A general liability insurance policy covers third-party lawsuits from people outside your business, such as:
- Bodily injuries suffered by visitors
- Damage you caused to a customer’s property
- Advertising injuries (slander, libel, and copyright infringement)
If any of these situations arise, your general liability coverage would pay for your legal expenses, such as attorney’s fees, court costs, settlements, or judgments.
For more information about general liability insurance, visit our general liability FAQ page.
What is professional liability insurance?
Professional liability insurance, also known as errors and omissions insurance (E&O), covers lawsuits related to the professional services or advice that your business provides.
Professional liability insurance covers client lawsuits claiming that you:
- Provided negligent professional services
- Failed to meet your contractual obligations
- Provided substandard or incomplete work
- Made mistakes or omissions
A professional liability insurance policy is especially important in the IT sector, where a customer might not fully understand the services you provide, and accuse you of making a mistake. It's also crucial—and sometimes required—in the fields of healthcare and law, where it's called professional malpractice insurance.
Even if you’re not at fault, you could still face an expensive lawsuit from a dissatisfied client. A professional liability policy can help protect your bottom line.
Key differences between general liability and professional liability insurance
General liability and professional liability cover different types of risks:
- General liability insurance covers third-party claims of a non-professional nature, such as a slip-and-fall accident at your business that results in a customer's bodily injury.
- Professional liability coverage insures against claims related to the services and advice you provide to customers.
If a customer is injured on your property, or you damage a customer’s property, your general liability policy would help pay for their medical bills or repair costs, along with any legal expenses.
If a customer claims you financially damaged their business by missing a deadline, making a mistake, or failing to deliver on a contract, it would be covered by your professional liability policy.
Another key difference is that general liability insurance often includes product liability insurance, which insures against claims that a product you made, sold, or distributed caused an injury or property damage.
Both policies cover different types of risk exposures, though each can help pay for your legal defense in the event of a claim against your business.
You may need one or both types of insurance, depending on the types of risks you face. Each policy can help with your defense costs, legal fees, and settlements arising from different types of liability claims.
Why you should carry both general liability and professional liability
While general liability and professional liability insurance cover different types of business risks, you may need both policies to fully protect your business from an expensive lawsuit and financial loss. You might also need both types of coverage to qualify for contracts, sign leases, and apply for business loans.
Anyone you have a financial relationship with may want to see that you’re fully insured against these types of business risks. In such a litigious country, many small business owners can face an expensive lawsuit, even if they’ve done nothing wrong.
Does general liability or professional liability insurance include cyber liability?
In a word, no. A professional liability policy covers claims of a financial loss because of unsatisfactory work. It would not cover claims that involve data breaches or cyberattacks.
For this, you would need cyber liability coverage, also known as cyber insurance. Cyber liability covers:
- First-party risks, in case your business suffers a data loss or cyberattack.
- Third-party risks, if a client accuses you of failing to prevent a data breach or cyberattack at their business.
Cyber insurance isn't automatically included with these policies, though it can often be added to a business owner's policy (BOP) or a general liability policy.
Choose the right coverage limits
Nearly 90% of TechInsurance customers choose a general liability policy with a $1 million per-occurrence limit and a $2 million aggregate limit.
How much liability insurance your business actually needs depends on the risks you face and your contractual obligations.
If your business is open to the public or has frequent visitors, such as a computer retail store, computer repair shop, or performs IT and technology training, you’ll likely need more general liability coverage than a business that operates virtually or has few visitors, such as a technical writer or an SEO and SEM consultant.
Conversely, if your clients have a significant financial stake in the work or advice you provide, such as a data analyst, systems integration specialist, or telecommunications specialist, you’ll probably need more professional liability coverage.
You should also check your lease, mortgage, and contracts, in case they require certain amounts of liability insurance.
If you’d like help figuring out what type of small business insurance you need and how much, talk to a TechInsurance insurance agent.
Which policy makes sense for your business?
You’ll likely need both types of business liability insurance to fully protect your business, though your coverage requirements will depend on the nature of your business, your risks, and financial obligations.
Protect your business with the right small business insurance
TechInsurance is a trusted insurance expert for small businesses insurance policies, with extensive knowledge of the IT sector. We help business owners compare quotes on business insurance policies from top-rated providers, buy policies, and manage coverage online.
By completing TechInsurance's easy online application today, you can compare free quotes for many types of insurance from top-rated U.S. carriers. TechInsurance insurance agents are available to help answer any questions you may have on the policies your business needs.
Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.
