The professional services liability question

You may be thinking that professional liability and general liability are the same thing — but the answer could surprise you.

As a business owner, do you need professional liability or general liability for your business? The answer could be both. If you're not sure why you might need these two types of liability insurance, or, if you're thinking, "Aren't those the same thing?", keep reading.

Let's start with the easy answer - most every business owner needs some form of business liability coverage. A popular version is called a General Liability Policy, also called commercial liability, or CGL. No matter what kind of business you have, you will probably need protection in case something happens to someone on your property, or if you (or others on your behalf) accidentally cause bodily injury to others or property damage to someone else's property.

General liability also addresses things like personal and advertising injury, which include coverage for damages resulting from libel, slander, false arrest, detention, malicious prosecution, copyright infringement and slander in your advertising. And, this type of insurance pays for legal expenses to help defend you if you're sued for something that's covered in the policy. You might not be responsible or guilty in the suit, but you still will likely have to defend yourself.

This is a simplified description of general liability insurance, but hopefully, you see how critical it is for most businesses.

Here's the real question: Do you know if you need professional liability insurance?

Professional liability is not the same as general liability. Whether or not you need professional liability often depends on the type of business you own.

First, let's look at how professional liability is different than general liability.

Say you're a florist. You have a small shop on Main Street and you deliver flowers to weddings most weekends. If a customer slips on water spilled from a floral vase in your shop and is injured, your general liability policy would respond. If you fail to deliver flowers to the correct wedding or deliver wilted flowers, you could be sued by the customer. In this case, no property other than the flowers were damaged, and no one was injured. This suit came as a result of your professional services (or, in this scenario, failure to render services properly). This is where professional liability insurance comes in.

Professional liability insurance is for errors, omissions or malpractice resulting from your professional services. Other examples of businesses that likely need professional liability include aestheticians, attorneys, IT professionals, engineers, architects, physicians, optometrists, pharmacists, printers, veterinarians, and many more.

So, while every business likely needs a commercial general liability policy, only those that provide professional services might need a policy that provides coverage for lawsuits that arise out of the service itself. These businesses probably need both types of liability insurance, and if a loss occurs, only one will respond.

The thing with both of these policies is that there's always an exception. Insurance is designed to address an endless number of possible unique scenarios, which can make it complicated.

For example, a beautician who makes a mistake while creating a particular haircut or style could be protected by a professional liability policy for any resulting damages.  Fairly straightforward. But, a professional liability policy may also cover lawsuits that are the result of injuries caused by infections from pedicures or scalp burns or other injuries arising out of the beautician's services. Are the injuries the result of the beautician's professional services (professional liability), or out of a completed operation (general liability)? It's possible it could be both.

For each claim, your agent and the insurance company will evaluate the loss and the coverage. The key is, make sure you have the appropriate coverages for your business.  To avoid conflict in event of a claim, it may also be prudent to maintain your general liability and professional liability with the same insurance company.

If you're not sure whether you need professional liability, general liability insurance, or both - or which policy would cover which type of loss - don't go it alone. Ask your insurance agent for guidance.

State Auto Insurance makes no representations or guarantee as to the correctness or sufficiency of any information contained herein, nor guarantees results based upon use of this information. State Auto does not warrant that reliance upon this document will prevent accident and losses or satisfy federal, state and local codes, ordinances and regulations. The reader assumes entire risk as to use of this information.

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