General Liability Vs. Errors and Omissions Insurance: What You Need to Know

Liability protection is a crucial component of any business’s success strategy. If a client accuses you of causing them financial loss due to poor quality work, you’ll need liability protection. If a guest is injured in a trip, slip, and fall accident on your premises, you may be held liable, too. Having general liability and errors and omissions insurance keeps you protected from the outcomes of liability lawsuits or claims against your company.

Here’s a look at the differences and similarities between these two types of business liability coverage.

General Liability Insurance

This coverage provides general liability protections that are necessary to the success of most businesses. It can pay hundreds of thousands of dollars in legal expenses, including attorney’s fees and settlements or judgments. The policy covers liability claims or lawsuits, such as:

  • Customers’ or guests’ bodily injuries sustained on your business premises
  • Damaging someone else’s property while delivering a service, such as installing a roof
  • Advertising injury due to defamation, copyright violations, etc.

What Type of Insurance Is Errors and Omission?

This policy covers professional liability or malpractice for service providers like real estate agents, contractors, and tax consultants. Unlike general liability, E&O insurance has a narrower scope, only covering lawsuits arising from professional mistakes, such as:

  • When a professional is accused of causing financial harm by neglecting their duty of care
  • Violating contract terms
  • Workmanship negligence
  • Oversights leading to losses/damages

If you’re a professional service provider, consider taking out an E&O insurance policy to cover any legal costs or settlements in case you’re sued for negligence or malpractice.

Is General Liability Insurance the Same as Errors & Omission?

These coverages are similar in ways such as:

  • Both cover specific liabilities that most businesses can’t avoid. No matter the size of your business, you can’t rule out the risk of slip and fall injuries on your property. Similarly, a client might sue you for professional negligence that caused them financial loss.
  • As a contractor, you might need both policies to get contract work.
  • In certain cases, a general liability policy may include work liability coverage. The extra protection can help a construction company when sued over substandard work that caused a physical injury.
  • Both are usually claims-made policies, meaning that you’re only insured if both the event and the filed claim or lawsuit happened during your active policy period.

Differences Between General Liability Insurance and E&O

General liability insurance and E&O differ in these key ways:

  • Each covers a different risk exposure. E&O insurance can’t pay for slips, trips, and fall injuries on your property. Similarly, general liability insurance can’t pay for loss due to the failure to observe professional standards of care.
  • General liability insurance has a broader scope of coverage, including third-party lawsuits, advertising injuries, and property damage. Malpractice insurance confines coverage to financial losses that a client suffers following poor-quality services or work.

Why Are Both the Policies Vital to Business Success?

Both general liability and E&O insurance cover risks that any small business can face day-to-day. As such, neither is a substitute for the other when you need full business liability protection. You’ll most likely need to have both policies if you’re in the professional services industry, and at least one of the factors below is true:

  • Your work involves handling the client’s property or visiting the client’s site.
  • You manufacture or sell products.
  • You have a business social media profile or advertise your services/products.
  • Clients, vendors, guests, or other persons besides your employees visit your business premises.

These are the main protections that general liability insurance and errors and omissions policies offer businesses of all sizes. To have an in-depth discussion about your business liability insurance options, contact the experts at Pittman Insurance Group, LLC right away. We’re happy to look into and help address your specific commercial insurance needs.

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