General liability vs. workers' compensation insurance

A general liability insurance policy protects your business against common business risks, such as customer’s bodily injury, damage to a customer’s property, copyright infringement, and advertising injury.

Most general liability policies also include product liability coverage, or you can add this protection as an added endorsement to your general liability insurance.

A general liability insurance policy would cover the following situations:

When your small business is sued over one of the above incidents, general liability insurance covers your attorney's fees, court costs, and settlements or judgments up to the policy limit.

Because these claims can be the result of accidents or oversights that any business may encounter, general liability is considered an essential type of insurance.

Workers’ compensation insurance covers your employees for work-related injuries and illnesses.

The workers’ compensation laws in most states require workers’ compensation insurance coverage for businesses with one or more employees.

Regular health insurance is unlikely to cover a personal injury or illness that happens on the job, and would instead be handled by workers’ compensation claims.

Workers’ comp coverage includes:

If you are a sole proprietor and don’t have employees, you can still carry workers’ comp insurance to cover yourself for medical costs that health insurance may not pay for.

Here’s how general liability and workers’ compensation insurance are similar:

Both policies deal with bodily injuries. General liability insurance protects you when a client suffers an injury on your property and sues you for medical expenses. Workers’ comp insurance steps in when your employee is injured while working and makes a claim for coverage.

Both policies may be required for construction professionals. If you work as a construction contractor, a general contractor may require you to carry your own general liability and workers’ comp coverage. A general liability policy can cover lawsuits over your completed work if it injures a third party or caused property damage. And having your own workers’ comp coverage means the general contractor won’t have to cover you with their policy.

In some states, construction workers must carry workers’ comp insurance coverage even if they don’t have any employees. For example, solo roofers in California must carry coverage.

Despite their similarities, workers' comp and general liability insurance differ in fundamental ways:

Workers’ comp insurance is regulated by state laws. It’s often the only business insurance policy that employers are legally required to carry outside of commercial auto insurance. Though the laws differ depending on where you live, most regulations apply when your business has a certain number of employees. In some states, that means one full-time or part-time employee. In others, you must have several employees before the mandate kicks in. Learn more about your state’s workers’ compensation laws.

General liability insurance matters regardless of your business’s size. While workers’ compensation mandates usually kick in at certain employee thresholds, a small business owner should have general liability coverage even if they have no employees. That's because there’s no predicting when a visitor could slip at your business, suffer an injury, and sue you for their accident.

You likely need both general liability and workers’ comp coverage to run a strong business. General liability insurance guards you against claims when third parties are injured on your property. Workers' compensation insurance helps your business adhere to state laws and protect your employees when their work takes a physical toll. Fill out an online insurance application to get quotes for both policies from top-rated insurance companies.