Small Business Insurance Policies
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General liability vs. workers' compensation insurance

Both general liability insurance and workers' compensation insurance provide coverage when someone is injured at your business. Learn the benefits offered by each policy, the key differences in coverage, and why you may need them for your business.

What is general liability insurance?

General liability insurance safeguards your business against the high cost of certain unavoidable third-party liabilities.

However, this policy does not cover employee injuries. Instead, general liability insurance covers third-party (non-employee) damages, including:

Man and woman talking in front of a storefront.
  • Bodily injuries that a person sustains at your place of business
  • Damage you accidentally cause to someone’s property
  • Advertising injuries (slander, libel, or trademark infringement)

What does general liability insurance pay for?

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 often considered an essential type of insurance.

What is workers' compensation insurance?

Workers’ compensation insurance (also known as workman's comp) provides coverage when an employee suffers a work injury or illness.

In fact, most states require employers to carry this coverage if they have even one employee. The laws vary depending on your industry and where you do business. You can count on this coverage to help your business pay for:

  • Work-injured employees’ medical bills and recovery expenses
  • Replacement wages when employees can’t work because of a work-related injury or illness
  • Death benefits including dependent support payments and funeral expenses when fatal occupational injuries occur
  • Employer's liability expenses when your business is sued over a workplace injury
Injured worker with icons representing medical treatment and bills.

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.

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How are general liability insurance and workers' compensation similar?

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.

How are general liability and workers' compensation insurance different?

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.

How much do general liability and workers’ compensation insurance cost for small businesses?

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Commercial insurance can be affordable. Median costs for small business owners are:

General liability: $42 per month
Workers' comp: $45 per month

Factors that influence business insurance costs include:

  • Your industry and risks
  • Business operations
  • Number of employees
  • Policy limits and deductibles

Protect your business with essential business insurance policies

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.

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