Here is the key difference between professional liability and general liability insurance.

A general liability insurance coverage, also known as business liability insurance. The plan offers protection against common liabilities arising from business operations. Here is what general liability insurance covers:

Bodily Injury: The general liability insurance offers coverage against bodily injury. Suppose a third-party vendor or customer is injured on your business premises as a result of your business operations. The plan will cover legal costs, medical expenses, or a potential settlement amount.

Property Damage: The plan also provides coverage for third-party property damage and loss resulting from the business's operations.

Advertising and Personal Injury: The plan also offers protection for claims of copyright infringement and slander. If the advertising and materials cause financial loss to another party, the plan will provide coverage for such incidents.

Exclusions Under General Liability Insurance Coverage

• Various exclusions that are not covered under the general liability insurance for contractors, retailers, etc. These exclusions are:

• The plan does not cover financial or monetary losses arising from business services or advice.

• The plan does not cover property damage or bodily injury caused by pollutants.

• Intentional damage or injury is not covered under the plan.

• The plan does not cover cyber threats such as data leaks or losses.

Cost of General Liability Insurance

The cost of general liability insurance may vary from business to business. Certain factors influence the cost, such as:

Industry risk: One factor affecting the general liability premium is industry type. High-risk jobs, such as construction, have higher premiums than lower-risk jobs.

Business size: Another factor that affects general liability insurance costs is the size of the business. If the business has more employees and generates high revenue, the premium will be higher due to greater liability risk.

Coverage limit: A high general liability insurance sum insured means a higher premium due to a higher payout during a claim.

Professional indemnity insurance protects professionals and service-based businesses against claims that arise from mistakes, negligence, errors, or omissions in the services they provide. If a client suffers a financial loss because of your advice, work, or professional decisions, PI insurance helps cover the legal costs and compensation.

• Professional Negligence If a client claims your service caused them a loss due to an error, oversight, or poor advice.

• Errors and Omissions Covers unintentional mistakes in reports, designs, calculations, or professional deliverables.

• Legal Defence Costs Pays for lawyer fees, court expenses, and investigation costs, even if the claim is not proven.

• Breach of Duty or Misrepresentation If a client alleges you failed to meet professional standards or misrepresented information.

Exclusions Under PI Insurance Coverage

• The PI insurance for consultants, doctors, etc does not offer coverage in various scenarios such as

• Any claim arising from the policyholder's fraud or malicious acts is not covered under the plan.

• Any claim arising from the services offered by the insured policyholder under the influence of alcohol and drugs is not covered.

• Loss and damage claims due to war or war-like activities are not covered under PI insurance.

• Claims for the incident or situations that policyholders are aware of before purchasing the plan are not covered.

Cost of Professional Indemnity Insurance

The cost of professional indemnity insurance may vary by profession. Several factors influence the premium amount, such as**

• Nature of profession One of the key factors affecting the professional indemnity premium is the type of profession. High-risk professions such as doctors, architects, and financial consultants usually pay higher premiums than low-risk service providers.

• Coverage limit The sum insured chosen under the professional indemnity policy also affects the premium. Higher coverage limits result in higher premiums as the insurer’s potential claim payout increases.

• Experience and claim history Another factor that impacts the cost is the professional’s experience and past claim record. Professionals with a history of claims or less experience may face higher premiums due to increased risk exposure.

Choosing between professional liability and general liability insurance depends on your business and the risks involved. Here is how you can choose the right plan that aligns with your profession or business.

Step 1: Understand Your Business Risk

Start by understanding the risks in your profession or business. For instance, if your business involves site work, client visits, etc., etc then the risk is more related to property or bodily damage. If your business involves professional services, advice, or other services, the risk usually arises from errors or negligence.

Step 2: Know Type of Claim You Face

Next, you need to know the kind of claims that could realistically be filed against you. Financial losses resulting from incorrect advice point to the need for professional indemnity insurance, while claims for bodily injury or third-party property damage indicate the need for general liability insurance.

Step 3: Check Industry and Client Requirements

Some professions are required by regulators or professional bodies to carry specific insurance covers. Even if not mandatory, many clients insist on insurance before signing contracts, making it important to choose a plan that meets both legal and commercial expectations.

Step 4: Decide If You Need One Policy or Both

Depending on your profession, you need to decide whether you want general liability or professional indemnity insurance. Many professionals face both operational and professional risks. In such cases, combining general liability and professional indemnity insurance ensures complete protection.

Step 5: Review Coverage Limits and Policy Terms

Once you have decided, you need to choose a sum insured that matches the size and risk level of your business. Carefully review exclusions, claim conditions, and defence costs coverage to ensure there are no gaps when you need the policy the most.

Understanding the difference between professional liability and general liability insurance is important before choosing the plan. If you work in a high-risk sector, such as construction or manufacturing, where there is a higher chance of bodily injury or third-party property damage, general liability insurance is a suitable option.

However, if you are a professional who provides advice, consultation, or specialised services, professional liability insurance is more relevant as it protects you against claims arising from errors, negligence, or omissions.

TATA AIG offers a customised professional indemnity insurance plan based on your profession. Whether you are a lawyer, consultant or engineer, our PI plan is carefully crafted to suit your profession needs.

With our professional indemnity insurance plan, you will get features such as legal defence coverage, loss document coverage, court attendance benefit, and more for policyholders. Secure yourself against professional negligence and error with our PI plan now.