General Liability Insurance vs. Errors & Omissions Insurance (What's The Difference?)

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General Liability Insurance vs. Errors & Omissions Insurance

General Liability vs. E&O Insurance

General Liability Insurance vs. Errors & Omissions Insurance. All enterprises will need to have insurance cover for liabilities incurred in the course of doing business. Often these claims and risks are beyond your control and it is wise to have coverage, especially in the case of expensive lawsuits against your company.

Two of the policies that business owners and providers of services should consider are the following. General liability insurance vs. business owners policy.. Both of these protect you in the case of your being sued for damages to people or property. They will cover you for court costs, legal fees, settlements and judgments. There are subtle differences between the two. In some cases having both will be necessary.

General liability insurance vs. errors & omissions insurance - learn which policy covers what and if you need one or both for your business.

About General Liability Insurance

General liability insurance vs. errors & omissions insurance: All businesses, even small home-based ones, should consider general liability. It is the basis of your business insurance. It covers most liabilities that any regular business may have. Its focus is on damages to property, bodily injury or damage to a third party.

If you, your employees, your products or services are responsible or are alleged to be responsible for such damages, then you will be covered by this type of policy. If you don't have GL and you are sued, yo will have to pay for court costs out-of-pocket and the damages/awards if you lose. GL is a wise protection to have in this case. It will cover you for injuries to visitors to your premises, possible damage to property belonging to your clients and abstract injuries such as slander, libel or infringement etc.

General liability insurance vs. errors & omissions insurance: In the case of claims against your business, this policy will cover all legal expenses. It can ultimately protect you from bankruptcy and financial ruin.

About Errors & Omissions Insurance (E&O)

General liability insurance vs. errors & omissions insurance: Errors and omissions insurance (E&O) is the insurance type which focuses on lawsuit protection in the area of your professional services being in question. It is also sometimes called malpractice or professional liability insurance.

for example, doctors will need to carry this insurance in case of possible damages caused by misdiagnosis or further injury at the hands of medical professionals. Patients may incur high costs as a result and claim for these. However, not only doctors benefit from this type of insurance. Any service provider should consider carrying it, it is a professional liability insurance against possible lawsuits in the case of any real or perceived negligence.

E&O will benefit you if:

  • The services provided by you were somehow negligent.
  • If the contract was inadequately fulfilled.
  • Care was perceived to be of a low standard.
  • Mistakes were made.
  • There are cases where a client will sue even through no fault of your own. They may just be unimpressed with your services and they may want to claim for losses.
  • With E&O your legal fees are covered.

All insurance policies are taken out to cover for unavoidable risks and liabilities. If clients visit your premises they may incur injuries, if your work involves services there is always the possibility that you may be accused of causing financial losses for someone.

There are occasions where having insurance is required by the general contractor or by large corporate clients in the case of procuring your professional services, cover may be required in order to land the contract. These employers will be concerned with their own liabilities with regard to your work.

When Do You Need Both?

General liability insurance vs. errors & omissions insurance: There are cases where it is advisable to have both types (GL and E&O) of insurance simultaneously. They cover different risks. General liability will cover you in the case of a customer being injured while on your property where you could be liable for medical expenses.

However, if the goods or services you provided were seen as below par and you failed to uphold expected professional standards then E&O is the insurance which covers for this.

You may need to have both if, you, in addition to providing professional services, are responsible for a client's property, or you visit it. If you manufacture or sell products, or you advertise your business, including advertising on social media, or if clients and other people visit your premises.

Errors & Omissions Versus General Liability

There are very rare cases where neither type of insurance will be required, this in the case of no services being offered, you do not have anyone visiting your property including the postman, you do not manufacture or sell goods, and you have no need to market your business anywhere.

Read More Insurance Comparison Articles

Learn about the differences between certain types of commercial insurance to help you find the right policies for your company.

Business insurance can be confusing, especially when you are looking to get specific types liability insurance. The differences between general liability and professional liability are common misunderstandings. We have also found that many people confuse their contractual needs for general and auto liability.

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