Both general liability and workers’ compensation insurance cover people for injuries resulting from business operations. The difference is who they cover. A general liability insurance policy covers third parties for injuries as well as property damage while a workers’ compensation policy covers employees for injuries that happen while working.
General Liability vs Workers’ Compensation: Side-by-side Comparison
Bodily injuries, property damage, and personal and advertising injuries from third parties
Work-related injuries and illnesses and business owner’s legal fees in most states
Is It Required Legally?
No—but may be contractually required
Yes—in most states
What Is General Liability Insurance?
General liability insurance is a commercial insurance policy purchased by business owners that protects against third-party claims. These policies are not required by state or federal law but may be required by contractual obligations like lease agreements.
What’s Covered By General Liability Insurance?
General liability protects a business from third-party claims stating that the business is responsible for property damage, bodily injury, and personal or advertising injury. Here’s how the coverage is broken down:
- Property damage: Pays for the repair or replacement of a third party’s personal property
- Bodily injury: Pays for the medical bills associated with a third party’s injuries
- Personal and advertising injury: Pays for damages when your business is found guilty of defaming another person or business
- Copyright infringement: Pays for the penalties associated with using someone else’s work without permission—mainly pertaining to your ads
- Reputational harm: Similar to advertising injury—pays claims that assert you said something that negatively impacted another business
What’s Excluded From General Liability Coverage?
General liability insurance policies have a healthy set of exclusions. Be sure to read through your policy to understand what types of claims it excludes fully.
Common exclusions for a general liability policy include:
- Commercial auto accidents: When you or an employee is in a commercial auto accident, this will be covered by commercial auto insurance instead of commercial general liability insurance.
- Employee injuries or illness: When employees get hurt or contract a work-related illness, this is covered by workers’ compensation insurance.
- Damage to your own business property: Business assets and property need to be protected by a commercial property policy.
- Errors in professional services: If you make a mistake while doing professional work, you will need to have an errors and omissions insurance policy for protection.
- Claims over the policy limits: Any claim that exceeds the policy limits will be the responsibility of the business.
- Illegal acts: General liability policies do not protect businesses when they engage in illegal activity or intentionally cause a loss.
Who Needs General Liability Coverage?
General liability insurance policies are not required by state or federal laws. This means that it is often optional coverage for a business owner to have. There are some contractual requirements, such as getting a commercial lease, that would require a business to obtain a policy. However, every business is at the same risk of loss as other businesses in their industry. This means that all business owners should consider getting a general liability insurance policy.
Getting a good general liability insurance policy doesn’t need to break the bank. With one simple application, a marketplace such as CommercialInsurance.net can shop your policy requirements around, doing all the legwork for you. This helps you get the best policy for the best price without a lot of hassle.
What Is Workers’ Compensation?
Workers’ compensation insurance pays when employees are injured while working. Every state has laws that change how and when coverage is effective but, for the most part, if an employee is hurt while performing work duties, their medical costs and lost wages will be paid by the workers’ compensation policy.
What’s Covered by Workers’ Compensation?
While the laws in states may vary, there are some common coverages found in most policies that include:
- Medical expenses: Pays for all the medical care needed by the injured worker
- Lost wages: Pays either short-term or long-term disability payments based on whether the worker can return to work—often around two-thirds of the average weekly wage, but can be different depending on state laws
- Ongoing care costs: Includes costs for physical therapy, medications, and follow-up doctor visits for the injured employee
- Rehabilitation costs: Pays to retrain someone who is unable to return to their original job due to a work-related injury
- Funeral expenses: Will pay a stipend for burial and funeral expenses along with lost wages for dependents
What’s Excluded From Workers’ Compensation Coverage?
Workers’ compensation will not cover injuries for anyone who is not an employee of the company. This includes former employees, family, or friends of employees. Additionally, there are rules in many states that limit how an injury may occur to be eligible for coverage.
Common exclusions for workers’ compensation include injuries incurred:
- From horseplay
- While intoxicated or on illegal drugs
- While performing an illegal act
- While willingly disregarding safety rules and laws
It’s important to ask your workers’ compensation insurance provider what exclusions apply as these will depend on the state that you live in.
Who Needs Workers’ Compensation Insurance?
In most states, any business with at least one employee is required to get workers’ compensation insurance. Policies must be in force prior to the start of the worker’s first shift. Some states, such as Texas, don’t have a requirement while others like Georgia require a policy when three or more workers are employed.
However, it is wise for a business to get workers’ compensation even if they aren’t required to by law. Just because you aren’t required to have a policy doesn’t mean you aren’t liable for the injuries. Businesses without workers’ compensation insurance can be sued for medical payments, lost wages, and held liable for all costs.
If you need a workers’ compensation insurance policy, look no further than The Hartford. It is a small business specialty insurance broker with some of the most robust small business workers’ compensation policies available.
General Liability and Workers’ Comp: Why You May Need Both
Whether or not you are required to have general liability and workers’ comp, you should consider getting both policies. All businesses are at risk of having an employee get hurt or having third-party incidents result in costly claims. Even sole proprietors could benefit from a workers’ comp policy that would protect their financial structure if they were hurt and unable to generate income while injured.
Getting the right insurance protection is important for business owners. You don’t want to pay for a policy that you don’t need or don’t have a large risk exposure with. Virtually every business could benefit from a general liability policy, and most businesses with at least one employee will have to get workers’ compensation insurance.
Take the guesswork out of shopping for insurance. CommericalInsurance.net has more than 200 partner insurance carriers. When you complete a short intake form, they shop your needs for you, making it easy to find the best deal out there. It takes just minutes to get your free, no-obligation quote.