Purchasing General Liability and Professional Liability Together: The Dangers of Putting All Your Eggs in One Basket.

Do you agree with the adage, “Don’t put all your eggs in one basket?”   The traditional response is yes; however, a recent trend in the insurance industry is causing some to throw that adage out the door.

The trend is to advise the Insured that it is advantageous to purchase General Liability and Professional Liability insurance with the same carrier.  But this is not always true.

When making a determination whether or not both Professional Liability and General Liability should be with the same carrier, it is important to evaluate the Professional Liability form. Not all forms are alike— in the Professional Liability Industry the forms vary significantly. Some may only have E&O coverage, when the risk may also need unauthorized access and/or copyright and trademark coverage. Having the appropriate amount of privacy coverage is a hot topic right now and a lot of companies either don’t handle or provide very minimal coverage for that exposure. Plus, when Insurance Agents do not provide this service for their Insureds it can open them up to an Insurance Agent’s E&O claim.  

Another important consideration is claims handling.  Who’s going to handle the claim, heaven forbid, if the Insured has a loss or potential loss? Because companies that specialize in Professional Liability typically are more service oriented, you will likely have a Claim Specialist or attorney who will handle the claim.  These individuals will typically have a good deal of experience with Professional Liability claims and have a network of attorneys through out the US who also have a good background in handling Professional Liability claims.  Although many of the package companies have attorneys on staff, they may send out a claims adjuster who is very versed in property damage or bodily injury losses but has zero experience in Professional Liability. 

While there may be situations where purchasing the General Liability and Professional Liability together from one insurer makes sense, it is not necessarily always suitable.  Much consideration should be given to the coverage and claims handling capabilities for the professional liability protection prior to deciding to put all those eggs in one basket.   Certainly, if you decide to put all your eggs in one basket, make sure the basket fits.