General Liability vs. Workers Compensation Insurance

General Liability Insurance vs. Workers Comp

General Liability vs. Workers Compensation Insurance. You're a small business owner, and you know how big of a role your employees play in your business's success. So if one, or more of them for that matter, get hurt on the job, which small business insurance policy should you rely on to help cover the costs of their medical expenses.

Does your workers' compensation insurance or does a general liability insurance policy cover it? Read on to find out as we explore the differences and similarities between general liability vs. workers compensation insurance.

General liability vs. workers compensation insurance - learn which policy covers what and if you need one or both for your business.

General Liability Insurance

General liability vs. workers compensation insurance: General liability was designed to protect businesses against lawsuits resulting from business-related injuries or illnesses filed by third parties. GLI provides coverage for:

Lawsuits, investigations and settlements if damages are filed against you.
Injury damages from accidents on your premises, your products or your operations.
Miscellaneous. General liability insurance can also cover advertising injury in the event your company's marketing violates someone's copyright as well as alcohol-related accidents (as long as your company is not in an alcohol-related business, such as the manufacture or distribution of alcohol).

General liability vs. workers compensation insurance: General liability insurance may be required by your client contracts. It's particularly important for businesses that come into contact with customers or vendors, for example shops, restaurants, tradespeople and salons. If someone blamed injury or damage on your business and sued, you could face hefty legal fees and an expensive settlement. Your general liability insurance could help pay this.

Workers' Compensation Insurance

General liability vs. workers compensation insurance: Workers compensation specifically provides payment to your workers who have been injured at work or have suffered an occupational illness. With workers comp, the insurance company agrees to pay all medical expenses to an injured employee. The employee, however, must provide proof that the injury occurred while performing job-related duties, but it is not necessary for them to prove that the employer was at fault in any way due to negligence.

Worker's comp pays for:

Medical expenses resulting from the injury or illness (including doctor's visits, medication, and surgery).
Replacement income in the event that the employee is unable to work while recovering.
Rehabilitation.
Compensation for permanent injury.
Payout to family or survivors if a worker is killed on the job.
Retraining or new job placement.

For employers, it covers the financial expenses to be given to the affected employee for work-related injury, illness or even death.

General liability vs. workers compensation insurance: Not all employers are required to purchase workers' compensation insurance. State laws vary, but generally, an employer's responsibility to provide coverage may depend on the number of employees, the type of business, the type of work or the relationship of the employee to you. A spouse or child, for instance, may not count as an employee. Also, states may exclude certain types of workers. These exclusions may include farmworkers, domestic employees, and seasonal or casual workers.

Similarities Between General Liability & Workers' Compensation

Both types of insurance provide coverage for bodily injuries. WC insurance pays for covered medical expenses when an employee is injured while working.

GLI pays for covered non-employees' medical bills if injured due to a covered event.

Differences Between General Liability And Workers Comp

Legal Requirements:

General liability vs. workers compensation insurance: A Workers compensation policy is a legal obligation for employers to carry. Under U.S. Department of Labor regulations, work comp Insurance is mandatory in all 50 states if you employ at least one person full or part-time. Specific conditions and exemptions will vary from state to state.

General liability insurance is not typically required by the state but a small-business owner should have GLI even if they have no employees. This type of coverage makes good business sense despite your best efforts; you cannot predict when someone sues you for his or her accident on your business property. Plus you might be contractually required to have it.

Injuries:

General Liability protects you when a client gets injured on your property and sues for medical expenses.

Workers' comp kicks in when your employee gets injured while working and makes a claim for coverage.

Coverage:

Workers' compensation insurance is very focused and deals exclusively with injuries on the job. General Liability on the other hand, is a more generalized insurance covering more than just injuries on the job.

General liability will protect the insured against lawsuits that involve libel, defective product injuries, advertising claims, patent infringement and copyright infringement.

Protection:

General liability vs. workers compensation insurance: Workers compensation protects you and your employees. Coverage is not designed to compensate any outside party, only the injured employee or the employee's dependents if the injured worker dies as a result of the work related injury or illness (death benefits are considered payments directly attributable to and solely for the "benefit" of the deceased employee not for the injury suffered by any outside party).

General liability protects third parties, such as vendors, customers, and other people in contact with your business or on your business property.

Workers Comp Versus Commercial General Liability

When it comes to running a business, anything can happen. Accidents are all too common. Having both general liability and workers compensation insurance covers you in multiple ways, keeping you and your business protected.

General Liability vs. Workers Compensation Insurance (What's The Difference?)