As a sole business proprietor, protecting yourself is key to success. And having the right insurance is a big part of that protection. While most entrepreneurs in your position know that they need liability insurance coverage, they may not have all the liability coverage they need because not all liability insurance is the same. Here's what you need to know about general and professional liability coverage.
What is General Liability Insurance?
General liability insurance coverage provides protection from accidental damage or injuries to others that you may be held liable for. For example, a landscaper on a garden tractor might accidentally bump into the client's vehicle. Liability coverage pays for the damage caused and covers medical costs if anyone inside was injured. It prevents the homeowner from suing the sole proprietor, who would be personally liable.
General liability has three main components. The first is property damage caused by you or an employee. The second is bodily injury and medical payments if someone is injured by you or an employee or on your business property. And the third is coverage against legal accusations like slander, fraud, and libel.
What Is Professional Liability Insurance?
General liability coverage is designed to protect businesses from the sorts of general risks, like an unforeseen accident, inherent in all business activities. But professional liability looks at risks specific to providing your services. An accountant, for instance, might make an error on a client's tax forms that results in financial losses or additional audits of the client. The accountant's professional liability coverage covers this type of liability.
Professional liability is often known as errors and omissions coverage. It generally covers accusations of negligence in performing services, errors, omissions, misrepresentation of your services, and incorrect advice. It is mandated for some professions, but available to nearly all businesses as an option.
Which Coverage Do You Need?
These two forms of insurance sound similar but serve very different purposes, so they should often be carried in tandem. While general liability is the more well-known form of accident coverage, many sole proprietors should also carry professional liability insurance if they perform any sort of skilled service directly to clients. Failure to do so could leave you personally at risk.
Where Should You Start?
If you're not sure what liability coverage you have or what you need, start by meeting with a business insurance agent in your state today. They will help you assess your business risks and find the right mix of insurance protection.
Share3 September 2021
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