If you're starting to freelance or opening a small business, you may be overwhelmed with your options for insurance. The main two types of insurance most businesses need are professional liability and general liability. In general, professional liability covers mistakes directly related to your work while general liability covers a wider range of mishaps that may not be within your professional scope. If you provide online services instead of physical services, often professional liability is adequate. However, not having general liability insurance when you need it puts your business at significant financial risk from a single lawsuit.
Below is a list of several situations when your business may need to secure general liability in addition to professional liability.
You Have a Physical Office Where You Meet With Clients
General liability protects you if a client, delivery person, or other individual is injured on your property. If you're working out of your home, your home insurance may cover physical injury to visitors, but you should make sure that it covers business visitors as well as personal visitors. If you have a separate, business property where clients, vendors, or delivery people visit, you will want general liability insurance.
You Visit Your Clients' Property
If all of your services are offered online, professional liability insurance will usually cover any physical damages or financial losses your services might cause. However, if you offer some of your services in person, you can accidentally damage your clients' property beyond the scope of your profession. General liability will protect you if you cause injury to someone or damage property while visiting a client.
If the damages you cause are part of your trade, then professional liability may cover them. For example, if a carpenter breaks a window while completing a renovation, the damages should be covered by professional liability. But if you are an IT professional and break a clients' window, you will need general liability insurance to cover the damages, because the damage is beyond the scope of your profession.
You Regularly Advertise
Any time you put out advertisements, you are at risk of a libel, slander, or copyright infringement lawsuit. General liability usually protects you from these types of cases. While you may practice ethical advertising techniques, it is important to remember that even if you are not liable, the court fees from a single lawsuit can be significant, so general liability insurance is a good thing to have if you advertise.
Many businesses need either general liability insurance or professional liability insurance. However, many sectors are starting to require both. If you aren't sure which you need, talk to an insurance broker with experience in your sector.