Workers’ Compensation Vs. General Liability Insurance

Workers’ compensation and general liability insurance both provide coverage when someone is injured at your business. A typical business should have both coverages. These business insurance policies help protect your business from different types of liability. General liability insurance protects your business from the damages it may cause, while workers’ compensation protects your employees from injuries or illnesses sustained on the job.

Let’s take a closer look at the difference between general liability and workers’ compensation insurance

What Does Workers’ Compensation Insurance Mean?

Employers are required by law to take reasonable precautions to ensure their workers’ safety. Nevertheless, mishaps do occur. Workers’ compensation insurance offers protection in the event of an emergency. It generally covers medical expenses and lost pay for diseases and injuries sustained at work. Most states require businesses with employees to have this policy, and steep fines are imposed for non-compliance. For small businesses, particularly, going without workers’ comp can financially burden them since they would need to pay all medical expenses out of pocket in the event of a serious workplace accident.

What Does General Liability Insurance Mean?

A general liability policy covers your business against claims made by third parties (outsiders). It offers financial security if you are found responsible for some of the most common mishaps that might happen at a business, like client injuries or property damage. It also offers protection in case you have to defend yourself against a libel or slander charge. While generally not mandated, it can be required of certain industries like construction. It may also be requested by your landlord, mortgage company, or clients. The following are common accidents that general liability covers –

  • Injuries to people who are not your employees
  • Damage to a property you don’t own
  • Accusations of libel or slander
  • Medical payments
  • Advertising harm
  • Accusations of libel or slander

Differences Between Workers’ Compensation and General Liability Insurance

  • One type of insurance covers workers’ compensation, while the other shields a company from third parties suing it (business liability).

  • Both can cover injuries, but for various individuals, Workers’ compensation covers employee injuries. General liability insurance protects against accidents your company causes to a client or other non-employee.

  • A small business owner should carry general liability insurance even if they have no employees, even though workers’ compensation laws typically take effect at particular employment thresholds. This is due to the fact that you can never tell when a customer will get hurt at your establishment and accuse you of being at fault for their mishap.

  • In many states, worker’s compensation insurance is mandated. State law does not mandate general liability insurance, but licensing authorities, commercial clients, landlords, or financial lenders might.

  • A business owner’s insurance (BOP) plan includes general liability coverage. Business interruption insurance and commercial property insurance are also included in a BOP. Workers’ compensation insurance must be purchased individually.

Difference in Cost Between Workers’ Compensation and General Liability Insurance

A stand-alone business liability insurance policy costs an average of $42 per month. You can save money by bundling general liability insurance in a BOP, which costs an average of $53 per month. Workers’ comp costs an average of $1 for every $100 in payroll, but the rate for your own small business could differ significantly from that average depending on your industry, state, and past workers comp claims. For instance, if you work in an industry like accounting or finance, your business will be viewed as less risky than someone working in the construction industry. This will mean lower workers’ compensation insurance rates.

Pittman Insurance Group, LLC Can Help!

As they protect you from different types of claims, it’s important to have both general liability and workers’ comp coverage. Learn more about what insurance you need for your business by contacting us at Pittman Insurance Group, LLC. Our team of experienced professionals is ready to assist you.

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