Both general liability and errors and omissions insurance policies can help protect your business from financial losses related to claims and lawsuits. However, the risks they protect against are different. So which one do you need?
To determine whether you need general liability or errors and omissions insurance, it’s important to know what they cover and the protection they offer. It can also be helpful to know the difference between errors and omissions insurance and other types of professional liability coverage, such as medical malpractice and dental malpractice insurance.
Here’s how to determine which kind of insurance is right for your business.
General liability insurance covers third-party claims for bodily injuries, property damage, and personal injury such as libel or slander, and it can help pay for medical bills, repair costs, legal defense, and settlements. General liability is a way to protect your business if a visitor to your workplace gets hurt, one of your employees accidentally damages someone else’s property, or you’re accused of harming someone’s reputation through your words or advertising.
General liability insurance is sometimes called “slip and fall” insurance because it can protect your business if a customer or visitor is injured at your place of business. For example, if a visitor to your office trips over a rug and suffers an injury, your general liability can help cover their medical bills, as well as pay for your legal defense and the settlement payment.
General liability insurance is also sometimes known as business liability insurance or commercial liability insurance.
Errors and omissions (E&O) insurance is designed for professionals and businesses who work with clients, and it can cover legal fees and settlement payments if a client says they suffered a financial loss because you made a mistake in your work for them. The types of “errors and omissions” covered by E&O insurance can include bad advice, unfulfilled promises, mistakes, and negligent acts committed while performing professional services. If you do work for clients, E&O insurance can be a financial lifesaver in the event of a lawsuit.
For example, if a bookkeeper makes a mistake that leads to a large financial loss for their client, that client could sue the bookkeeper or their business for negligence. Errors and omissions insurance can help provide the bookkeeper with a dedicated claims team to offer support, hire an attorney, and cover a settlement related to the claim.
Errors and omissions insurance is a type of professional liability insurance, and the terms are sometimes use interchangeably.
A wide range of businesses and professionals can benefit from general liability insurance. If you own or rent a physical office space, visit client properties, own or rent vehicles for your business, or advertise your business services, you may want to look into a general liability policy. Some examples of people and businesses who may need general liability insurance include:
Errors and omissions insurance is valuable for any business, employee, or independent contractor who has clients and provides services requiring a professional level of skill or expertise. Some of the professionals and small business owners who should consider E&O insurance include:
Errors and omissions insurance is a type of professional liability insurance for people and businesses who work with clients. But there are other, more specialized kinds of professional liability insurance for healthcare providers — namely, medical malpractice insurance and dental malpractice insurance.
Medical and dental malpractice insurance differ from errors and omissions insurance in that they are specifically intended to cover claims brought by patients. If a healthcare provider makes a mistake that causes a patient bodily injury, the patient or their family can sue the provider. In this case, malpractice insurance can pay for the healthcare professional’s legal defense, settlement payment, and other costs associated with the claim.
When combined, general liability and E&O insurance policies can cover a broad scope of accidents and oversights that could lead to legal costs and settlements. Having both coverages is particularly important if you or your business work in a professional services industry and operate commercial property with a physical space that clients can visit.
The key to choosing the right type of coverage is understanding what each policy covers and where the risks lie for your business. For instance, if you’re a marketing contractor who provides services to clients but doesn’t operate out of an office or visit customers, you may need E&O insurance but not general liability insurance. If you’re a commercial landlord who rents office space to tenants but provides no professional services, you might need general liability coverage but not E&O.
Depending on the unique risks you face, it’s possible you may not need both general liability insurance and errors and omissions insurance. But forgoing business insurance altogether when running a company opens up significant financial risks. It’s better to be safe than sorry, and being sued without proper insurance is a mistake you don’t want to make.
If you’re still not sure what type of insurance is right for you, our in-house insurance experts are here to help.
