How General and Professional Liability Insurance Help Strengthen a Technology Business
General Liability Insurance and Professional Liability Insurance offer complementary insurance coverage that protects IT businesses from common risk exposures.
Just as a carpenter needs multiple tools to finish the job, small-business owners may want a few policies to cover the variety of lawsuit risks they face. Each policy fills a different need.
General Liability vs. Professional Liability Insurance
Let's start with the basics: how is General Liability different from Professional Liability? Both insurance policies cover lawsuits. Both can help pay your legal bills when you're sued. The similarities pretty much end there:
- General Liability Insurance may cover lawsuits when a third party sues you over property damage, bodily injury, or reputational harm.
- Professional Liability Insurance can help cover lawsuit costs when a client sues you over missed deadlines, errors, omissions, and other problems with your IT work.
As a tech business owner, you'll have both professional and general liability risks. Clients could sue you over your work – a professional liability. Just as easily, you could be sued if someone slips and falls at your property – a general liability.
By having these two policies protect your business, you get more comprehensive coverage than if you only carried one.
Commercial General Liability Insurance
Say you're a developer. A client hires you to add a feature to its website. For the project, you'll have to work onsite for a few days.
In a situation like this, a client will often want you to have General Liability Insurance. If you damage the client's property or cause an injury, your insurance can cover the incident.
While software consulting isn't exactly the riskiest business, plenty of things can go wrong. Spill a cup of coffee on a workstation. Or leave your laptop cord along the floor, causing a trip-and-fall accident. Any scenario could lead to thousands in a hefty lawsuit.
General Liability Insurance may cover lawsuits over…
- Third-party bodily injuries.
- Third-party property damages.
- Reputational harm.
Even if you aren't working onsite, General Liability Insurance is a fairly standard requirement in contracts and lease agreements. Make sure to check your consulting agreements for insurance requirements.
Small Business Professional Liability Insurance
For many IT consultants, Professional Liability Insurance is not only important financial protection; it's a crucial way to acquire clients.
Many clients want hired contractors, consultants, or tech companies to carry Professional Liability Insurance. It's a sign you're financially stable and it offers them peace of mind. They know that mistakes you make could be covered by your policy.
Professional Liability Insurance may cover lawsuits when a client sues you over professional errors, including…
- Missed deadlines.
- Performance issues with your technology.
- Outage losses.
- Scope disputes.
Of course, that's not an exhaustive list. Professional Liability Insurance can cover many diverse tech-related errors. See "5 Professional Liability Exposures Every Tech Business Has" for more information on common Professional Liability lawsuits that can strike IT businesses.
Sample Insurance Quotes for Small Business Insurance
If you're looking for information on the cost of small business insurance, check out…
You can also contact an insurance agent to discuss small business insurance options for your IT firm.