Thu, 07 Dec 2023

The Difference Between Commercial Liability Insurance, Professional Liability Insurance, and Business Liability Insurance

Insurance language sounds like mumbo jumbo to us folks who would rather be busier with the workings of our personal businesses. Deductible, additional insured, co-insurance - these all sound like a different language! Now when it comes to the titles of these insurance policies: commercial general liability insurance, professional liability insurance, and business liability insurance, we're really left out of the loop. What is the difference between all of these? They sound similar, but clearly, they're not the same. 

As a business owner, you really don't have time to educate yourself and the nitty gritty of all the different types of business liability insurance out there. You need to know which insurance or insurance type(s) is/are best suited to your operations. Your concern isn't with insurance - it's with what you do best.

Not to worry! EasyCover Insurance experts know insurance like nobody else, and we want to help you keep your business running smoothly. If things go south, it's better to know you have coverage. Let's get into the differences between these three types of insurance.

What is the difference between business liability insurance and commercial liability insurance?

Business liability insurance is an umbrella term used to describe commercial liability policies, such as your average commercial general liability insurance policy. It's technically an envelope encompassing professional liability, public liability, product liability, and so on.

So, is there a difference? No. But business liability can take many forms. For example:

Public Liability insurance is a policy that offers coverage like commercial general liability but is less extensive. Public liability or PL insurance covers any damages or injuries suffered by third parties on your business premise, whereas commercial general liability insurance will cover that and accidents arising off-premises due to the company's activities or products.

Product Liability insurance is a form of insurance policy designed to cover a business for any injuries or property damage arising out of the malfunction or defect or a product it designs, manufactures, or distributes. This insurance type can also go together with another product known as product recall insurance. Product recall insurance covers costs pertaining to the recall of a product.

Pollution Liability insurance is a type of business liability insurance policy that covers a business for its role in environmental hazards and pollution. It covers third party bodily injury and third-party property damage due to environmental hazards caused by your business activities.

Evidently, there's a ton of different types of business liability policies. Some overlap, and some cover an entirely different aspect of doing business. There are benefits to all these different kinds of business insurance, but your best means of getting the insurance fitted to your needs is to work with a broker to help you decide on any one of them. 

 What is the difference between professional liability insurance and commercial liability insurance?

This is definitely a frequently asked question, and the answer is this:

Professional liability insurance is a type of business liability insurance coverage that can also be referred to as errors and omissions insurance and helps protect a business if your client should experience financial damages or losses due to the professional service or advice you provide. It can also help cover a business' legal defense costs. 

As an example, if you were an accountant tasked with handling a client's bookkeeping and you made a calculation error, you could wind up costing that client thousands of dollars. They could turn it around on you and sue you for their losses. Professional liability insurance would cover you in this instance.

Maybe you work as a lawyer, and you were busy providing one of your clients with legal advice. You accidentally omit an integral piece of information and, as a result, the client comes back and sues your business. Professional liability insurance would cover you.

Sometimes professional liability insurance is required by law, and sometimes you'll have to carry it if your clients require you to when you sign a contract. Regardless of if it's needed or not, any professional dealing in the offering of professional advice or services needs it. 

Commercial general liability insurance, on the other hand, helps cover bodily injury claims, property damage, medical payments, advertising injuries, and reputational harm if your business, its premises, or your employees are responsible for losses. 

Most small to mid-sized businesses should always take out a general liability insurance policy to protect their occupation from the risks they could face in numerous different common business situations. It's included in many business owner's policies.

Who needs professional liability insurance?

Professional liability insurance is often needed by the following:

  • Accountants
  • Bookkeepers
  • Consultants
  • Contractors
  • Lawyers
  • Physical therapists
  • Project managers
  • Property managers
  • Real estate agents
  • Tech professionals

Who needs commercial general liability insurance?

Most businesses need commercial general liability insurance, including all of the above plus any business that interacts with clients on any level, offers a service that requires them to visit the client at their home, has a physical premise, or that uses equipment to go about their daily tasks.

That really covers quite a lot of businesses. You may be wondering, which do I need? The answer is: you could quite easily need both forms of coverage, especially if you were a professional dealing in the offering of professional advice and you interacted with clients daily, had a physical premise, and even visited your clients at their place-of-work.

All in all, business liability insurance comes in many forms, but the only real surefire way to know the difference between commercial liability insurance, professional liability insurance and business liability insurance is to work with a broker and navigate the exact needs of your business. 

EasyCover's brokers and representatives are more than happy to assist you and your business. Give us a call today to discuss your business' requirements and how we can help you.

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