Do you know what’s the difference between professional & general liability insurance in Canada?
Quite frankly, the difference between professional & general liability insurance is a very common question we hear from business owners. But before we answer what’s the difference between professional & general liability insurance it’s important to note that insurance companies build insurance products in silos. This is because one insurance product can’t cover everything. You see, the variables used to underwrite each insurance policy are quite different and ultimately correlate to the specific risk being insured.
Ok. So the key difference between professional & general liability insurance…
…starts with a definition. Professional liability insurance is often referred to as Errors & Omissions Insurance, E&O or Professional Indemnity. More specifically, it covers individuals and organizations from liability for alleged financial losses their clients could bring against them based on advice and/or services they did or didn’t provide to clients who have paid them for their advice and/or services.
This is why with professional liability insurance…
…in most cases, bodily injury or property damage caused as a result of their professional services performed are excluded, with the exception of architects, engineers and a few other professions. Some examples of professional liability claims can include:
- a lawyer missing an important fact in a lawsuit that results in their client losing a case;
- a marketing or business consultant highly recommending a risky strategy that results in a significant reduction in their clients sales.
And why with general liability insurance…
…in contrast, general liability insurance covers bodily injury or property damage caused to third parties and explicitly excludes liability for financial losses associated with services provided to clients for a fee, which is commonly referred to as the professional services exclusion.
In more practical terms, the general liability policy is typically quite broad in scope and covers things like slip and falls, products liability issues, accidental damage by a business tenant to a leased location, etc. With general liability, the key is that there has to be bodily injury or property damage for this policy to respond.
Ultimately the key difference involves specifics.
As you can see, the difference between professional & general liability insurance is primarily based on the type of damages incurred with professional liability covering strict financial loss without the need for bodily injury or property damage and general liability requiring bodily injury or property damage in order to trigger the policy.