What’s the Difference Between Workers’ Comp Insurance and General Liability Insurance?


Small business insurance is confusing. It can be difficult to understand the differences between workers’ comp (workers’ compensation) insurance and general liability insurance.

While Coterie recommends finding an agent in your local community, learn more about the similarities and differences between general liability coverage and workers’ compensation.

General Liability Insurance Explained

A general liability insurance policy covers losses from claims of damage or injury to any third party as a result of interacting with your business, employees, or business property.

Bodily injury includes customers, vendors, partners, and others who may come into contact with your business that is physically harmed.

Property damage includes damage to the assets of a third party in the line of work.

Additionally, general liability policies will cover legal fees, court costs, and damages from lawsuits covered by the policy.

Why have a General Liability Policy?

A general liability policy may very well be required by vendors or business partners. Many companies want proof of coverage to ensure the other party is prepared with proper coverage should an unexpected loss occur. As a small business, it’s beneficial to carry general liability insurance coverage.

What is Workers’ Compensation Insurance?

Workers’ compensation coverage protects both the employer and the employee in the case of an injury incurred at work. Employees are protected as the insurance policy will pay for medical bills related to the injury, as well as lost wages due to being unable to work. Small business owners are protected by limited financial coverage for legal fees and damages.

Workers’ compensation coverage include medical care for employees injured (or who contract an illness) during work.

If needed, workers’ compensation policies also cover rehabilitation to get the worker back to health and back to work.

If the impacted worker is unable to return to work, workers’ compensation insurance can cover disability benefits.

In the event of a fataility at work, the policy pays out death benefits to the survivors.

Lastly, if a workers’ compensation claim is chllenge or the small business owner is sued, the policy would defend and indemnify the employer.

Should You Get Workers’ Comp Coverage?

In the U.S., workers’ compensation is required. State laws differ, so be sure to look up regulations in your area.

Similarities and Differences of General Liability and Workers’ Compensation

The coverages of general liability policies and workers’ compensation policies can be easily confused because both policies cover injury, property damage, and legal fees.

Check out the differences:

General LiabilityWorkers’ Compensation
Covers injuries to third party or property damageCovers injuries to employees
Protects third partiesProtects employees
Covers legal fees brought by a third partyCovers legal fees in suits brought by an injured employee
Not regulated Regulated at the state level 

What coverage do I need?

Speak to your agent and broker who will know the local regulations and laws governing your state, as well as what your personal situation means in terms of risk.

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