As a business owner, there are a lot of decisions you need to make to protect your business from risk. Choosing the right business insurance is one of them.
Of all the business options available, general liability and workers’ compensation are two types of coverage that all businesses need. While both offer significant financial protection, there are notable differences in what types of accidents they cover.
General Liability Insurance
General liability insurance provides protection for your business. Including property damage, bodily injury, and advertising injury claims made against you by a third party. However, this policy doesn’t cover employee injuries.
Here’s what general liability covers:
- Property damage: General liability covers the costs when a customer’s property is damaged by an employee, or a business’ operational negligence. If an employee accidentally stepped on a customer’s bag and broke its contents, or a sign fell on a customer’s car and broke the windshield, general liability covers the loss.
- Bodily injury: When someone such as a customer or vendor suffers physical injury or emotional distress due to a business’ operations, services, or employees, general liability insurance covers the medical expenses of the person physically hurt by your business if you’re found at fault.
- Advertising injury: General liability protects your company in the face of slander, libel, and copyright infringement allegations.
General liability covers legal fees, punitive damages, property damage costs, wage compensation for nonemployees, and medical bills for nonemployees up to the limit of the policy. This type of insurance doesn’t cover professional liability, product liability, or employee injuries.
Though it isn’t a required coverage in all states, purchasing general liability insurance is just best practice in managing the inherent risks that come with doing business.
Workers’ compensation insurance covers lost wages, medical bills, and other expenses when an employee gets injured or sick as a result of their job.
Here’s what workers’ compensation covers:
- Work-related employee injury: Workers’ compensation covers injuries an employee suffers when they’re acting within the scope of their job, whether it’s on or off site. This includes injuries due to workplace violence, and injuries incurred at the workplace due to natural disasters. In some states, workers’ comp also covers psychological injuries like PTSD or job-related stress.
- Work-related employee illness: When employees become sick because of exposure to toxins or hazardous waste, or contract an occupational disease, workers’ comp covers medical treatment.
Workers’ comp covers employees’ medical treatment, physical therapy, and lost wages due to workplace injury. It also provides death benefits if an employee dies while performing a job-related task. Death benefits include burial fees and survivor benefits.
Most states require businesses to carry this coverage. However, requirements vary depending on the state in which you do business.
Though there are some similarities between general liability and workers’ comp, there are also some key differences. Both policies deal with bodily injury, with the differentiator being whose injuries each policy covers. General liability covers claims made against your business from individuals who aren’t employees. Workers’ comp covers anyone who works for your company who sustains an injury as a result of performing work-related tasks.
To run a strong business, you need both general liability and workers’ compensation, in addition to other lines of coverage. Contact us today to learn more about what types of coverage you need to protect your business.