Running a business in New York brings its fair share of risk—for both you and your team. So how do you choose the best insurance policy for protection?
Key Takeaways:
- Liability plans are among the most important business insurance coverages in New York.
- General liability insurance provides financial protection for your business against property damage and physical harm.
- Professional liability can protect businesses against fallout from professional error, unsatisfactory performance, and negligence.
If there’s one thing no New York business owner can afford, it’s uncertainty over what their liability insurance protects them from. Worse is operating with none.
Understanding the differences and similarities between general liability and professional liability insurance is the first step toward comprehensive protection. Some businesses may only need one. Others both.
Peace of mind starts with understanding exactly what each type of liability insurance covers and how it applies to your business’s risk profile.
That’s why, in this article, we’ll break down the differences, explain coverage scenarios, and help businesses choose the right protection for their industry.
A Closer Look at General Liability Insurance in New York
General liability insurance protects a business if someone is injured or property is damaged and the business is held legally responsible.
Some basic examples: a customer slips and falls on your business premises, or your business causes physical damage to a customer’s home or vehicle.
The affected parties could then demand that your business cover the financial damage for costs such as medical care or physical repairs. These payouts—and potentially legal expenses—can be exorbitantly expensive without insurance.
Some general liability plans can help shield businesses against being sued by an ex-employee for wrongful termination, or against the theft and loss of customers’ financial and/or personal data. Claims arising from false advertising, libel, or slander may also be covered.
Things not covered by general liability insurance are:
- Criminal acts.
- Intentional damage.
- Negligence.
- Theft of or damage to your business’s equipment or property.
General liability insurance isn’t required by law for New York businesses. However, getting a general liability insurance policy provides a buffer between your business and potentially catastrophic financial losses.
It also provides reassurance to potential customers that doing business with you is a safe move, given that your business is properly insured.
General liability, however, does not cover professional mistakes. That’s where professional liability insurance comes in, protecting businesses when clients claim errors, negligence, or bad advice.
How Professional Liability Insurance Plans Work in New York
You might see professional liability coverage referred to as Errors and Omissions (E&O) insurance, but it’s usually the same thing. This coverage is well-suited to protect businesses that provide clients with guidance and advice, information, or outcome projections.
Examples of professions that use professional liability insurance are legal teams, brokers, doctors, and consultancy firms. Professional liability protects these and other businesses against negative outcomes caused by their advice or performance. It can also protect against:
- Copyright infringement.
- Negligence.
- Personal injury.
- Misrepresentation.
It won’t cover businesses against bodily injury or cyber incidents. Additionally, professional liability typically only extends to the employees of the business that owns the policy. Any subcontractors should carry their own liability coverage, as is also the case with general liability.
Other scenarios unprotected by professional liability include:
- Intentional acts.
- Property damage.
- Injured employees.
- Discrimination lawsuits.
- Contractual liabilities.
While covering your professional mistakes is a focus of professional liability coverage, it will still protect you even when a claim against your business is unsupported.
Like general liability, professional liability isn’t required by law for New York businesses. And just like general liability, the benefits of having it far outweigh the risks of operating without it.
How Risk Profiles Affect General Liability vs. Professional Liability
It’s a good idea for any business to guard against liability. Having the right amount in relation to your business model becomes essential the riskier your product or service is.
Contractors, tree trimmers, and roofers are prime examples of professions where considerable risk is often present, posing a danger to onsite teams and the people and property around them. Likewise, large retail chains that process hundreds of customers daily and employ large teams of people face pronounced risks of accidents occurring on their premises.
Your business’s risk profile, therefore, plays a large part in how much your liability coverage will cost and how extensive your policy should be. Other factors like existing claims history, number of employees, and how long you’ve been in business also contribute to how your premiums will be set.
This doesn’t mean high-risk businesses can’t get general liability coverage. Excess and Surplus Lines (E&S) insurance exists to serve particularly high-risk clients who may be considered uninsurable by the general market.
Ultimately, the precise nature of liability coverage can vary between providers, particularly when it starts to branch off into specialized policies for specific professions.
That’s why it’s always best to speak to an experienced insurance provider who can assess your business and recommend general and/or professional liability to protect your assets.
General Liability vs. Professional Liability: A Further Layer of Protection
Even when you’re confident that you have the right amount of liability insurance in place, having a little extra for optimal protection never hurts.
We’re referring to umbrella policies, which can provide a significant amount of further financial protection beyond other liability plans, and often for very reasonable monthly rates.
New York State’s Department of Financial Services lists umbrella policies—also known as excess liability—among the main types of coverage businesses should consider to protect their interests as comprehensively as possible.
And don’t forget: the question of general liability vs. professional liability may be moot because you could find your business is more comprehensively protected by having both.
NICRIS is here to help people develop a deeper understanding of business insurance coverage in New York by offering an hour-long insurance review that’s completely free.
We’re also here to answer your coverage questions via our contact form, and we’re always happy to meet you in person if you’d like to drop by our office. Get in touch today!