General liability vs. workers' comp insurance

A general liability insurance policy protects your business against common business risks, such as a customer’s bodily injury, damage to a customer’s property, copyright infringement, and advertising injury.

Most general liability policies also include product liability insurance, or you can add this coverage as an endorsement to your general liability policy. Product liability insurance can help cover your legal expenses if someone claims that a product you sold, made, or distributed caused an injury or property damage

A general liability insurance policy would protect your small business in the following situations:

• A customer has a slip and fall injury at your business.
• You or an employee cause property damage to a customer’s home or business while visiting their property.
• Someone sues your business for libel or slander over something you post on social media, your company website, or an advertisement.
• A rival business sues your company for a claim of copyright infringement.
• A customer claims they were injured using one of your products and files a product liability lawsuit.

Workers’ compensation insurance covers your employee's medical costs when they experience work-related injuries and illnesses, as well as any resulting legal expenses you may face.

In most states, workers' compensation laws require small businesses to carry workers' compensation insurance coverage if they have one or more employees.

Regular health insurance is unlikely to cover a personal injury or illness that happens on the job, and would instead be handled by workers’ compensation claims.

Workers’ comp coverage includes:

• Employee medical expenses and recovery costs (such as physical therapy) for work-related injuries and illnesses.
• An employee’s lost wages if they’re unable to work because of a work-related injury or illness.
• Employee death benefits and dependent support payments in case of a fatal injury at work.
• Employer’s liability expenses, such as legal fees and settlements, in case an injured employee sues your business over a workplace injury.

You may need both types of coverage to fully cover your risks. You’ll likely need workers’ comp insurance if you have one or more employees.

Some sole proprietors and independent contractors also buy workers’ comp for its medical benefits and lost wages coverage, in case they’re injured on the job and unable to work. Your health insurance company is unlikely to pay your medical bills for a work-related mishap.

As mentioned above, general liability is typically only mandated for licensing requirements in certain professions. Many small business owners buy general liability coverage even when it’s not required, because it insures against so many risks.

General liability insurance is recommended for your small business if you:

• Have customers and other non-employees visit your business.
• Use third-party locations for your business activities, such as visiting someone else’s property.
• Promote your business through social media or regular advertising.