Errors & Omission insurance and general liability insurance both protect the business against most of the common liabilities, however, they cover lawsuits of different types. Here is a quick overview of these two types of insurance plans:
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The general liability insurance works as a foundation of the protection plan of business. Under this type of insurance policy, a range of liability covers that most of the businesses require for their expansion despite their size. A general liability insurance plan provides insurance coverage for lawsuits that are for:
When a person or organization that is outside the insured company files a lawsuit against it, a general liability insurance policy provides coverage for the legal expenses. This may include the fees of the advocate, costs of court, and settlement. In this way, general liability insurance can save its policyholder from paying hundreds of thousands of rupees from his/her pocket.
An error and omission insurance policy is also known as malpractice insurance or professional liability insurance as per the industry. This policy provides a narrower focus than a general liability insurance policy. Even though the insurance policy as well covers the lawsuits of third-party, it only provides protecting shield to the business from various lawsuits of professional mistakes.
All the professional services providers must have a errors and omission insurance policy that includes real estate agents, tax papers, and experts of the technology. An insurance policy can help in paying for the lawsuits incurring due to:
A business owner may have to pay a hefty amount as legal fees even if his/her business is accused falsely. For example, a dissatisfied client of a business can be unhappy with the results of its work and may decide to sue the business for making up his/her expenses.
In such cases, errors and omissions insurance policy can help to make sure that the business does not need to pay for all the legal expenses whether they are actual or alleged made by a company. This can include fees of advocate, settlements, and cost of court.
Here is the fundamental difference in both these types of insurance plans:
As mentioned earlier, both these insurance types cover liabilities that any owner of a small business might come across. Therefore, one should consider having both these policies when his/her business offers professional services and at least one of the below-mentioned points are true:
Summing It Up!
By far the meaning, definition, and the differences between general liability and errors and omissions insurance policies must be clear to all. However, there are some similarities as well, which are both make claim-based coverage, cover some uncertain liabilities, etc. So before buying any of these one must understand his/her requirements first.
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