California Business Insurance: General Liability vs. Professional Liability

Posted on October 11, 2010

Often times, our Sacramento insurance agency is contacted by individuals that perform professional services such as engineers, realtors, mortgage brokers, consultants, architects or property managers requesting insurance against potential negligence resulting from the services they provide.  These individuals often request California general liability insurance with the belief that this insurance provides a broad range of coverages, including among other things, protection against negligent acts.  This common misconception can lead to a gaping exposure if left uncorrected. 

Professional liability insurance, (also known as errors and omissions insurance depending on one’s industry), protects service professionals against the claims of their clients resulting from potential negligence arising out of the services they provide.  This insurance is typically provided in increments of 1 million dollars with deductible’s ranging from $1,000 to $2,500.  Professional liability insurance differs substantially from California general liability insurance, which typically provides coverage primarily for bodily injury, property damage or advertising injury.  In any event, understanding what is being covered by the insurance you are purchasing is very important.  A good advisor will conduct a thorough fact finder to understand each individuals particular risk exposures and recommend coverages that are appropriate. 

It should be noted that all professional liability insurance includes exclusions, so it is very important to identify the risk exposures for your particular business and match those with the appropriate insurance policy.   While it may be  common to assume all individuals from the same industry face similar risks, this is not the case.  As an example, some realtors or consultants may work out of an office with regular public access, while others might work out of their home.  Those working from home could have a lower exposure to claims from bodily injury if most client interaction is done outside the home.  Regardless of your situation, it’s important to have a unique insurance program tailored to the needs of your particular business. 

Being proactive in selecting a quality California professional liability policy may not only prevent a disaster if an uncovered claim arises, it may also save you money if you have been paying for coverages you may not need.  Contact your California commercial insurance provider and schedule a time to review your insurance package sooner rather than later.  You can also contact our office and we can conduct a free, no obligation review of your current insurance.

Jeremy Schaedler

El Dorado Hills, California