Running a business comes with risks, no matter your industry. Whether it’s property damage on a job site or an unexpected employee injury, one incident can quickly turn into an expensive setback. That’s why having the right insurance is so important.
Two of the most essential forms of coverage for any business are general liability insurance and workers’ compensation insurance. Although they sound similar, they protect your business in very different ways.
Understanding the difference in what they cover and why you need both can help you stay protected, compliant, and prepared for the unexpected.
What Does General Liability Insurance Cover?
General liability insurance protects your business from claims involving third-party injuries or property damage. In other words, it covers incidents that affect people other than your employees.
This coverage typically includes:
1. Bodily Injury to Third Parties
If a customer, client, or visitor is injured because of your business operations, general liability helps cover medical costs, legal fees, or settlements.
2. Property Damage
If you accidentally damage someone else’s property during the course of your work, your policy can help pay for repairs or replacement.
3. Legal Defense Costs
If someone files a lawsuit against your business, general liability helps pay for attorney fees, court expenses, and settlements.
What Does Workers’ Compensation Insurance Cover?
Workers’ compensation protects your employees when they experience a work-related injury or illness. It also protects your business from costly legal and medical expenses tied to employee injuries.
Coverage typically includes:
Medical Care – Doctor visits, hospital treatment, surgeries, medications, and follow-up care related to the injury
Lost Wages – Income support when an employee cannot return to work immediately
Rehabilitation – Physical therapy, occupational therapy, and programs that help employees return to work safely
Disability Benefits – Payments for long-term or permanent impairment caused by a workplace injury
Death Benefits – Financial support for dependents and funeral expenses if a work-related incident results in a fatality
General Liability vs. Workers Compensation: What’s the Difference?
Even though both policies protect your business, they serve very different purposes.
General liability insurance covers accidents that involve third parties, such as customers or visitors. It pays for injuries, property damage, and legal expenses when someone outside your organization is harmed because of your business operations. This type of coverage also protects you from lawsuits filed by members of the public.
Workers’ compensation insurance, on the other hand, applies specifically to your employees. If someone on your payroll is injured or becomes ill due to their job, workers’ comp pays for medical treatment, rehabilitation, lost wages, disability benefits, and in severe cases, funeral costs. It also limits your legal exposure by preventing most employee injury lawsuits.
One of the most important distinctions is who the policy protects. General liability never applies to employee injuries, and workers’ compensation never applies to customer or client injuries. They fill completely different roles, which is why they work best together.
Why Your Business Needs Both Policies
Many business owners ask, “If I have general liability, do I really need workers’ comp too?” The short answer is yes. Here’s why:
1. They Cover Two Completely Different Risks
General liability covers the public. Workers’ comp covers your employees. Neither replaces the other.
2. Having Only One Leaves Costly Gaps
A customer injury and an employee injury could both happen, and only one policy would apply to each situation.
3. Workers’ Compensation Is Often Legally Required
States set strict rules on who is required to carry workers’ comp insurance, especially for construction and trade businesses. Operating without it can lead to fines, penalties, or stop-work orders.
4. Both Policies Protect Your Business From Lawsuits
General liability protects against third-party lawsuits. Workers’ comp reduces the likelihood of employee lawsuits.
5. Carrying Both Builds Trust With Clients
Many customers won’t work with contractors or vendors who don’t carry both coverages. It shows professionalism and responsibility.
Get the Right Coverage for Your Business
If you’re unsure whether your current policies are giving you the protection you need, the team at Darr Schackow Insurance can help. We’ll walk you through the differences, review your coverage, and make sure your business is protected from every angle.