General Liability and Workers’ Comp: What’s the difference?

August 23, 2021 •

If you’re a business owner, you need to protect yourself against lawsuits and other professional liability issues. Taking out adequate insurance can ensure your financial wellbeing, no matter what happens. But what types of policies do you need, and what do they protect against? In today’s post, we’ll go over general liability insurance and workers’ compensation, so you can figure out whether you need one or both.

What Is the Difference Between General Liability and Workers’ Comp?

In short, general liability covers clients, vendors and other visitors, while workers’ comp covers employees. Let’s dive deeper.

When you own a small business, you’re faced with a number of risks that could affect your business but also the wellbeing of your staff and your clients. In order to be covered no matter what situations arise, you might need several types of liability insurance. In essence, general liability is necessary if you have a physical location such as a store or an office that your clients or other vendors visit. If they get hurt while there, general liability will protect you by paying for injuries, medical bills and damage to property of others, as well as legal fees if you are sued.

However, general liability does not cover injury to your employees, so you’ll need to get workers’ compensation insurance for them. Both of these policies are similar because they cover physical harm, but they don’t focus on the same group of people. An in-person business with both employees and customers onsite will likely need both, while you’ll only need general liability if you don’t have staff.

What Is General Liability Insurance?

General liability covers third-party damages, which means that it protects you when you inadvertently hurt another person or damage their property while they are at your place of business, or you have visited them in their home and are providing services in person. Although the vast majority of healthcare workers would never harm their patients or clients on purpose, accidents and mistakes can happen, and they can be damaging to your practice and the future of your career.

For example, one of your patients may trip or otherwise injure themselves while on your premises. Alternatively, their property might be damaged. In such a case, they can sue you and claim compensation for their losses. Liability insurance will pay for the lawyer and any medical expenses or other types of compensation your client or patient receives.

When It is Needed

You need to take out a general liability policy if you have an in-person location where you conduct your business. If people other than your staff enter your premises on a regular basis, you’re at risk, and you need to protect yourself against lawsuits in case someone gets injured.

Professionals who visit clients in their own homes or healthcare workers that visit patients in-home also need this type of insurance. Going to clients’ and patients’ homes poses a chance of third-party property damage and a client falling while you are in their home providing them care. A slip and fall or other incident can occur where you are providing your services.

What Is Workers’ Comp?

While general liability covers damages to third parties, workers’ comp addresses issues related to your workforce. If one of your employees suffers from an injury or an illness they contracted while working for you, they can claim compensation, so you need to be prepared for this.

In addition to the costs of your team members’ medical care, you might also need to pay for replacement wages, support for their dependents, and legal representation. A good policy will cover all of those. Workers’ comp is required in most states if you have any employees.

When It Is Needed

Workers’ compensation insurance is needed any time you have staff who work at your place of business. Although most employers do everything they can to create a safe environment, accidents can happen anywhere. This is particularly true if your employees perform physical work, interact with other people, or handle dangerous substances. No matter what type of business you have, workers’ comp offers you protection against lawsuits from employees.

What Insurance Should I Purchase?

Now that you know the difference between general liability and workers’ comp and whether you need one or both, you might wonder if there are any other products you should consider. In addition to general liability and workers’ comp, everyone working in healthcare and small business owners or consultants will need professional liability insurance, which almost protects professionals if they make a mistake while treating a patient, such as a misdiagnosis or prescribing the wrong medication; or for consultants and business owners for errors or omissions.

A great insurance company can help you to determine what types of policies are best suited to your individual situation and how much they might cost. To get started with NOW Insurance, fill out our easy online application to get a free quote in three minutes. Our AI-enabled platform will walk you through each step and guide you towards a product that offers you optimal coverage without any add-ons that don’t provide value. That way, you get the maximum benefit for a great price.

General liability insurance and workers’ compensation are both crucial for businesses, and they both protect you against lawsuits related to bodily harm. However, while general liability pertains to third parties like customers who might get injured at your premises, workers’ comp is only needed if you have employees. Contact us to find out more about coverage needed for your unique situation.