General Liability vs. Workers’ Compensation Insurance: What’s the Difference?

Injuries are a common concern for many small business owners. That’s why many have General Liability and Workers’ Compensation policies to help protect their finances. These forms of coverage are often part of a contractor’s risk management plan, creating a crucial safety net for their business.

Though they both cover injuries, there are key differences between General Liability and Workers’ Compensation insurance. Let’s look closer at these policies and how both may be important for your small business.

What is General Liability insurance?

Imagine this scenario: A delivery person accidentally trips over your misplaced toolbox and injures themselves. It’s just an unfortunate mishap, but as the business owner, you could be liable for their medical bills and other compensation.

General Liability (GL) insurance protects businesses against the risk of third-party injury and property damage. You may also hear GL insurance referred to as Commercial General Liability (CGL) or by the less formal “slip and fall” coverage.

A third party is any member of the public that interacts with your business, such as customers, clients, vendors, suppliers, or delivery people. It does not include you or your employees.

Is General Liability insurance required by law?

General Liability insurance is not typically required by law. However, there are reasons why you may need to get a policy:

• Receiving a professional license – GL insurance is sometimes a licensing requirement for tradespeople and skilled professionals, such as healthcare workers or accountants.
• Leasing commercial space – A commercial landlord may ask for proof of GL insurance before renting their office or workspace to you.
• Contracting or subcontracting – Larger companies that hire you as a contractor or subcontractor may mandate minimum levels of GL coverage to work with them.

Recommended reading: General Liability Insurance requirements

What is Workers’ Compensation insurance?

So, what happens if you or an employee is injured at work? Your General Liability policy won’t cover these injuries. You may also need Workers’ Compensation insurance to protect your business more fully.

Workers’ Compensation (WC) insurance provides benefits to your employees when they make a claim against your workplace for injury or illness. You may also know WC insurance as Workers’ Comp or Workman’s Comp.

A WC insurance policy typically covers the costs of medical bills, lost income, and rehabilitation or physical therapy. It can also provide compensation to family members if an employee passes away as a result of their job.

Is Workers’ Compensation insurance required by law?

Yes, you must have a Workers’ Compensation policy in every state except Texas. The rules regarding when to buy WC insurance vary from state to state. Typically, you will need a policy before you hire your first employee. This includes part-time, seasonal, and temporary staff.

Check the workers’ compensation laws in your state to ensure you are meeting the current requirements for your business. You could face hefty fines and business closures if you do not follow workers’ comp laws.

GL vs WC insurance recap

Here’s a quick recap of General Liability and Workers’ Compensation insurance:

General Liability	Workers’ Compensation
Covers third-party claims of property damage or bodily injury	Covers employee injuries, serious illness, and death that occur while on the job
Does not cover injuries or property damage suffered by you or your employees	Does not cover injuries suffered by customers, clients, vendors, or other members of the public
May be required to get a professional or trade license, lease commercial property, or by companies you contract or subcontract with	Required in every state, except Texas, usually before you hire your first employee
Also known as Commercial General Liability or “slip and fall” coverage	Also known as Workers’ Comp or Workman’s Comp

How much do General Liability and Workers’ Comp cost?

Like any insurance, the cost of General Liability and Workers’ Compensation policies can vary significantly from business to business. Premiums are based in part on different factors, such as:

• The services you or your business provides
• Your annual revenue
• How many employees you have
• Where your business is located
• How much coverage you need

Often, comparing quotes from more than one insurer can help you better understand the amount you can expect to pay for General Liability or Workers’ Compensation insurance.

Finding business insurance that works for you

General Liability and Workers’ Compensation insurance can help protect your business against costly injury claims and lawsuits. You may need or want to have both policies, depending on what you do and how your business is structured.

Buying business insurance is simple with BizInsure. Click, compare and buy policies in minutes—we’ll even send your certificate of insurance for General Liability and Workers’ Compensation instantly by email. Start comparing quotes now!