There are several different insurance policies that you can take out as a business owner. General liability and professional liability are two of the most popular policies – they both offer a wide range of coverage, helping to protect businesses from an array of different lawsuits.

A lot of business owners get confused between general vs. professional liability in NJ. In fact, some business owners assume that they are the same thing. This isn’t the case – while general and professional liability have their similarities, the coverage offered by each scheme is very different.

Below is an outline of the two schemes offered by us at Central Jersey Insurance Associates and the differences between them, so you can pick the right insurance type for your business.

What is General Liability Insurance?

Most businesses can benefit from taking out general liability insurance. This type of insurance can protect you against lawsuits that may arise because of injury or damage to property, as well as protecting against advertising injuries.

It is often necessary for construction companies and tradesmen to have this insurance scheme in place as there is a higher risk of injuries and property damage.

That said, such accidents can still occur in many other types of businesses – injuries can still commonly occur in offices, shops, restaurants, factories and clinics.

Advertising ‘injuries’ are also possible in many lines of work. A few examples of advertising injuries include slander, misappropriation and copyright infringement. Even when marketing your company honestly and transparently, such accidents can still occur.

What Does General Liability Cover?

Some incidents covered by general liability include:

• Physical injury to employees and visitors
• Property damage
• Advertising injuries

What is Professional Liability Insurance?

Professional liability insurance is beneficial to any company that provides a professional service. This type of insurance tends to cover acts of negligence such as failing to complete work, failing to keep up contractual promises or making mistakes and omissions.

Professionals that can benefit the most from this type of insurance include architects, engineers, lawyers, doctors, accountants, realtors and IT technicians.

Other businesses, however, can still benefit from this insurance – construction companies and tradesmen can still fall trap to lawsuits as a result of not completing work or failing to carry out promises in a contract.

Professional liability insurance is sometimes referred to as ‘errors and omissions insurance’ or ‘malpractice insurance’, although these are tailored to specialist types of businesses (for instance, malpractice insurance schemes tend to be targeted largely at medical and legal professionals).

What Does Professional Liability Cover?

Some incidents covered by professional liability include:

• Failure to meet contractual promises
• Failure to complete work adequately
• General mistakes and omissions

What are the Main Differences Between General Liability vs. Professional Liability in NJ?

General liability and professional liability can benefit businesses of all sizes and both cover unavoidable liabilities. However, the coverage offered by each scheme is different.

Some of the main differences are outlined below:

• General liability covers largely physical damage, professional liability covers largely financial damage.
• General liability covers accidents in which an employee, customer or third party feels that they have received physical damage in some form – this could include bodily damage, property damage or damage to their brand/reputation.
• Professional liability tends to cover lawsuits that arise from customers feeling that they have been shortchanged in some way – usually as a result of the service they paid for not being properly delivered.
• General liability tends to cover incidents that are directly your fault, professional liability covers incidents that may not be your fault. Lawsuits involving physical damage tend to be easier to prove.

Although you may still receive a false personal injury claim, defending yourself is easier in these cases.

Lawsuits involving financial damage are sometimes harder to prove – a customer may feel that they have not received the service they paid for, even if you believe that everything was up to spec. Professional liability will still pay out compensation for these claims, whether or not you are at fault.

Which Type of Insurance is Right for Me?

Most businesses can benefit from both types of insurance. By taking out both schemes, you can be guaranteed comprehensive coverage against most types of lawsuits.

Of course, if you’re a small business on a budget, you may decide that it’s best to take out one of these schemes for now. To help you choose the most appropriate coverage, here are a few questions that you may want to ask yourself.

What are the Main Risks My Business Faces?

If there’s a greater risk of physical damage than financial damage, general liability is likely to be more suitable. Tradesmen, for instance, can almost always benefit from this type of insurance.

Meanwhile, if there’s a greater risk of financial damage than physical damage, professional liability may be more suitable. Professional advisors, for instance, tend to be more exposed to this risk and should therefore consider this coverage.

Which Type of Insurance Do My Clients Expect Me to Have?

In some cases, clients and contractors may be less inclined to work with you unless you can prove that you carry a certain type of insurance. For instance, when working with a construction company, many people may want to know that the company they are hiring has general liability.

Some clients may similarly refuse to work with professional advisors unless they can show proof that they carry professional liability insurance.

Why Get Coverage From Us?

Whether you choose general liability or professional liability, we can help you get the best coverage.

We serve many small businesses across New Jersey, helping to offer protection from costly lawsuits that many businesses might not otherwise be able to afford. With lawsuits against businesses on the rise, it’s important to have the right defense.

Now you know the main differences between general vs. professional liability in NJ. Don’t hesitate to contact us today – we’ll provide you with a quote and get you the coverage that you need.