CGL or PLI or both?
Any Ontario business owner knows that insurance is imperative to protecting their business and customers. You probably also know that there are tons of different liability polices available. Understanding these polices can be difficult, which is why it is necessary to research each available option. This will help you can choose the best policy that will address the risks faced by your company. Not only choosing the appropriate policy is important, but also choosing a reputable insurance agent is just as important, if not more.
Two of the most common types of insurance polices available are general liability and professional liability. While both of these insurances can protect your company against lawsuits and the names are very similar, they are still very different. Below, you will learn about the differences between general and professional liability insurance and which will be best for your business.
Understanding General Liability Insurance
General liability insurance also known as commercial liability insurance operates as the name suggests. This type of insurance covers you against any third party lawsuits that involve bodily injury or property damage. The term “third party” refers to anyone other than your insured employees.
General liability insurance will cover attorney and witness fees, settlements, and court costs. In some cases the policy can also cover any immediate medical expenses or property damage costs that are incurred. For instance, if a customer walks into your place of business and slips on the floor, resulting in bodily harm, they can file a claim against your general liability insurance policy. Your general liability insurance will cover all the costs of the litigation and if you are found at fault, it can also cover the medical costs.
Understanding Professional Liability Insurance
Professional liability insurance also known as error and omissions insurance protects you against third party lawsuits, but just in a different manner. For instance, if a public service provider in Ontario makes an error that leads to financial losses for their client, the professional liability insurance policy will cover these losses. In the event that the customer decides to sue the service provider, the policy will also cover the court costs and lawyer fees for the service provider.
Do You Need Both Policies?
One of the most common decisions that insurers must make is whether or not the public service provider needs both types of liability insurances or just one of them. Well, if you are a service provider, professional liability insurance is always a must, because one simple mistake could lead to a huge lawsuit that could potentially ruin your company. General liability insurance may be optional, if your customers do not frequently enter your place of business. However, if your place of business is open to customers all throughout business hours, you probably want to sign up for both policies.
A contractual agreement between a customer and a public service provider may stipulate certain liability insurance policies, especially errors and omissions. More often than not, the business owner will already be covered under an E&O policy, but this is not always the case. Obtaining E&O insurance is not that difficult and only requires the completion of a simple application for a request of coverage.