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General Liability Insurance vs. Workers’ Comp – What You Need to Know

Most businesses need to have general liability and worker’s comp insurance. These policies protect your business against various types of liabilities.

Worker’s compensation protects your employees from work-related illness or injury, while general liability insurance protects your actual business.

In this post, we’ll have a closer look at general liability insurance vs. worker’s compensation insurance.

What is General Liability Insurance?

General liability insurance or commercial general liability can protect your business in case of a lawsuit due to bodily injury or property damage. You can buy this policy alone or bundle it with other coverages.

What Does General Liability Policy Cover?

Commercial general liability insurance is among the most important coverages you can purchase for your business.

Without proper insurance coverage, a liability claim can bring your business to its knees.

A small business liability insurance policy can protect your business from:

1. Third-Party Property Damage

A general liability insurance policy will help cover costs if you or your employee causes damage to someone’s property.

2. Third-party Bodily Injury

General liability insurance policy will step in if a person injured on your business premises sues you.  For instance, if a delivery person breaks their wrist after tripping on loose carpeting, this policy can pay for the medical expenses and cover lawsuit costs.

3. Costs Due to Advertising Injury

What happens if one of your competitors claims that your advertising is similar to theirs? If they file a lawsuit claiming that this is affecting their business, general liability will come to your rescue.

4. Reputational Harm

What happens if your business is sued for slander or libel? General liability will help cover legal costs if someone accuses you of making a statement that slandered their business.

Here are some of the cost that a general liability insurance policy will help cover if a claim is made against your business:

  • Evidence costs
  • Legal costs
  • Witness fees
  • Judgments or settlements

What is Worker’s Compensation?

No matter the measures that you’ve taken to keep your employees safe, accidents can still happen. An employee can become ill or get injured on the job.

Worker’s compensation is a type of insurance that pays employees who become injured or disabled while on their job.

By accepting the benefits of worker’s compensation, the worker agrees to waive the right to sue their employer. In most cases, worker’s compensation policies help cover medical costs related to injuries or illness incurred due to their employment.

Worker’s compensation does not only protect the finances of your employees but also minimize work-related liabilities.

Businesses are obligated to have worker’s insurance in most states. Each state has its own unique laws that regulate which businesses need coverage. For instance, every business with at least one employee is required to carry worker’s comp in Nevada.

Here are some claims that the worker’s compensation can cover:

  • Medical expenses due to an illness or injury caused by their employment.
  • Partial wage replacement if workers are forced to take time away from work to recover.
  • Disability benefits if an employee suffers a partial or permanent disability.
  • Death benefits to cater for funeral costs if an employee passes on due to work-related accident.

Who Needs General Liability Insurance?

The minimum coverage for most businesses is general liability insurance. It is important for businesses that:

  • Works with customers or with customer’s property more often
  • Allows customers to visit
  • Have employees working offsite

Who Needs Worker’s Compensation Insurance?

Every state has its own regulations on who should carry the worker’s comp policy. But even if you’re not required by law to have worker’s compensation insurance, it’s still advisable to buy it. Without this coverage, an employer is liable for an injured or sick employee, and the employees won’t get the much-needed recovery benefits.

How to Combine Both Coverages to Protect Your business?

Since general liability and worker’s compensation coverage protect your business from different types of claims, it’s important to have both of them.

General liability coverage will protect your business against claims that it caused:

  • Bodily injury
  • Property damage
  • Advertising damage

Worker’s compensation coverage provides benefits to enable employees to recover from work-related illness or injury. It also reduces an employer’s liability for work-related injuries or illnesses.

How are Worker’s Compensation and General Liability Similar?

  • Both of them deal with bodily injuries
  • Both policies are required for construction contractors

Despite their similarities, here’s how general liability and worker’s comp insurance are different:

  • Worker’s compensation insurance is regulated by state laws
  • No matter the size of your business, you’re required to have general liability insurance.

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