Differences in Commercial General Liability Insurance and E&O
June 11, 2015
Most small business insurance protects your company from the financial stress associated with dealing with clients, investors or customers that may become unsatisfied with your products or services. But it’s important to know which policies address the types of risks that your company may face; a fact that should always be considered when deciding which policy might work best in protecting your interests.
For example, while you may know that both, a general liability (GL) insurance policy and Errors and Omissions (E&O) insurance helps to safeguard you against lawsuits, you may not fully understand which covers what liability, or how to tell the difference.
Commercial general liability insurance is designed to protect property owners, businesses, professional and other commercial concerns from the costs associated with legal judgments and defense fees for claims involving property damages and/or bodily injuries caused to other organizations or individuals when they occur on your commercial premises.
Errors and Omissions insurance (also called professional liability insurance or malpractice insurance) is coverage that specifically focuses on the lawsuits that stem from your professional services. While this policy is especially important for service providers to carry, many small business owners can also benefit from its coverage. That’s because professional liability insurance shields you from third-party lawsuits alleging any of the following:
Your company provided negligent professional services
Failed to uphold contractual promises
Provided incomplete or unprofessional work, or
Made mistakes or omissions in the services provided
While both policies cover certain liabilities, they don’t actually cover the same liabilities. Here’s how GL and E&O insurance are alike; general liability and E&O policies work together to mitigate your expenses when accidents and oversights land you in legal trouble, and either policy may be required by client contracts.
In addition, commercial general liability insurance covers your business from lawsuits your business may face over advertising injuries (e.g., slander, libel, misappropriation, and copyright infringement). Any small-business owner, no matter the industry they’re in, or the size of their business, can face these types of claims. That’s why many consider this policy to be the keystone of any business protection plan.