General Liability Insurance vs. Workers’ Compensation Insurance

As a business owner, many responsibilities fall on your shoulders. You’re responsible for keeping up with business functions, such as making money and marketing, but you’re also responsible for the well-being of everyone who enters into your building— to a certain point.

Because of this, you need to have certain types of business insurance to protect you from having to pay enormous amounts for claims of injury. There are two types of insurance that will protect your business from this type of claim: general liability insurance and workers’ compensation insurance. Here’s an in-depth description of them both.

General Liability Insurance (GLI)

General liability insurance (also known as business liability insurance) is a type of business insurance that all businesses should have. It not only protects businesses from claims of bodily injury, but it also protects against claims of:

  • Advertising injuries (copyright infringement)
  • Property damage (damage to customer’s property)
  • Reputational harm (slander and libel)

GLI covers legal expenses if someone sues your business for bodily injury, copyright infringement, property damage, and/or slander/libel. It also covers damage costs if you or one of your employees damages a customer’s home (construction companies) or package (delivery services).

Premises Liability

Probably the most common and most important claim that GLI is bodily injury. This is if a customer/client/visitor becomes injured on your property and files a premises liability lawsuit— a lawsuit which can also apply to other properties you own. Not many customers or clients (unless it’s another business) tend to sue a business for reputational harm, so that leaves harm to individuals and property.

Some of the most common ways that customers become injured on your property include animal bites, asbestos exposure, inadequate security, road/sidewalk defects, and slipping, tripping, and falling. As a business owner— even if you’re renting the building that you’re operating your business out of— it’s important that you make sure your business is a safe place for your customers/clients and any other visitors that may come through your doors (e.g., maintenance, cleaners, etc.).

Online Businesses/E-Commerce

Obviously, online businesses that have no physical store won’t have to worry about claims of this nature, but you’re still going to need general liability insurance— especially if you sell a product that can be consumed by your customers. It’s also wise to look into data breach insurance, just in case your company is the target of a data breach by cyber criminals. Physical businesses should have data breach insurance too.

Workers’ Compensation Insurance

The people coming in and out of your business aren’t the only ones at risk of getting hurt. In fact, your employees may be more at risk of injury than customers/clients. There are both obvious and hidden hazards in virtually every type of occupation. 

Some of the most dangerous occupations include construction, logging, and roofing, while some of the safest include accountant, paralegal, and telemarketer. However, that doesn’t mean that these jobs present no dangers at all. Examples of injuries (both minor and major) that can affect employees include:

  • Crashes/collisions (with work vehicles)
  • Exposure to harmful substances
  • Fire/explosions
  • Overextension
  • Poor posture, causing back problems
  • Repetitive strain, such as those caused by using a computer
  • Slips, trips, and falls
  • Stuck by equipment, objects, or other workers

If a work injury causes an employee to not be able to work, you may be legally obligated to pay for medical costs, ongoing treatment, lost wages, and even death benefits and funeral costs— which is why workers’ compensation insurance is required of employers in almost every state.

Commercial Auto Insurance

If your employees drive a company car, you’re going to need commercial auto insurance as well. Depending on the policy you choose, this may or may not cover employee injuries sustained in an auto accident, which is another reason why it’s good to have workers’ compensation insurance. However, workers’ compensation insurance may only cover these injuries if your employee was not at fault.

Although these two types of business insurance are very similar, they were created for two different groups: the people your business serves and the people who work for you— and as a responsible business owner, you’re going to need both types. Part of being a responsible business owner means that you create a safe space for all who enter your building. This includes: properly training employees to work safely, keeping your space clean and free of clutter, and conducting daily inspections for any apparent and potential hazards.