General Liability vs Workers’ Comp: What’s the Difference?
Most small business owners confuse general liability and workers comp. Here’s what each one actually covers, when you need both, and what happens if you skip one.
These two policies sound similar but cover completely different things. Confuse them and you could end up paying a $200K injury claim out of your own pocket.
General Liability Covers OTHER People
GL pays for bodily injury and property damage you cause to third parties — customers, vendors, the public. Slip-and-falls in your shop, damage you cause on a job site, lawsuits from injured customers.
Workers Comp Covers YOUR Employees
Workers comp pays for medical bills and lost wages when one of your W-2 employees gets hurt on the job. It’s required by law in CA, AZ, and NV the moment you hire your first employee. Texas is the only state where it’s technically optional.
A Real-World Example
Your employee is installing a kitchen cabinet. The cabinet falls. Two things happen:
- 1) The cabinet damages the homeowner’s tile floor → General Liability pays
- 2) The cabinet breaks your employee’s foot → Workers Comp pays
Without BOTH policies, one of those claims comes out of your pocket.
Cost Comparison
- GL: $400 – $1,500/year for most small businesses
- Workers Comp: $0.75 – $2.74 per $100 of payroll, depending on trade and state