Worker’s compensation insurance and General liability insurance are two often debated insurance policies in the world of insurance. An employer should indeed have at least one of these two insurance in his business. However, what other truth are there to know about these two insurance policies?

In this article, you will be reading thorough information about the difference between general liability insurance and worker’s compensation insurance.

What Is General Liability Insurance?

General liability insurance is an insurance cover that is designed to offer protection of a business from risks such as property damage, injury, or any other type of claim. To understand how real general liability is, now, take, for instance, a customer slips and falls in your store. The general liability insurance that you have over your business would cover their medical expenses and any legal fees if they decide to sue.

This type of insurance is usually applied when claims such as bodily injury, property damage, and claims of copyright are made to your business.

What Is Worker’s Compensation Insurance?

Worker’s compensation insurance is a type of insurance that covers the risk incurred by an employee as a result of their job. Now, take, for instance, one of your employees injures their back while lifting heavy equipment at work. Worker’s compensation insurance would cover their medical treatment and compensate them for any lost wages during their recovery period.

This type of insurance is done to protect your employees and covers you (the employer) from potential lawsuits that may arise from these claims. It covers medical expenses, rehabilitation costs, and the death of your employees.

Now that you’ve seen how general liability and worker’s compensation insurance works, let’s check out some major differences between these two types of insurance policies.

 Differences Between General Liability Insurance and Worker’s Compensation Insurance

There are two major differences between general liability insurance and worker’s compensation insurance. Here they are:

1. Coverage Scope

The two insurance policies differ in terms of coverage scope.

– General Liability Insurance: This insurance protects your business against claims that come from a third party. This “third party” may include customers, clients, or vendors. Here, the employee of your business does not fall under this insurance policy.

– Worker’s Compensation Insurance: This insurance protects your business against claims that come from your employees in the course of their work. Yes, only injuries sustained in the course of an employee’s job are permitted to fall under. Any injury that is sustained outside the business premises does not fall from this policy.

2. Legal Requirements

The legal requirements of both insurance policies tend to differ.

– General Liability Insurance: In many countries, it is not a legal requirement that an employer should have general liability insurance. However, out of courtesy, it is recommended that employers have this insurance policy in place to cover their businesses.

– Worker’s Compensation Insurance: This insurance policy, on the other hand, is required by law in most countries. This is a requirement so that employees are not treated as slaves at their jobs and are compensated in the event of any injuries sustained.

FAQs

Can a business have both general liability and worker’s compensation insurance?

It is possible. It is recommended that businesses adopt both types of insurance to ensure that all parties are protected in the event of any claim.

 Is worker’s compensation insurance required by law?

In most countries, a worker’s compensation insurance is required. Without that, it is not possible to operate a business. This is necessary because employees have the right to be compensated after sustaining injuries at the workplace.

 Does general liability insurance cover employee injuries?

No. General liability insurance covers only third-party claims.

Can an independent contractor claim worker’s compensation?

No, this is not possible. An independent contractor is expected to have insurance cover over himself. So, there’s no need for an independent contractor to be covered under worker’s compensation insurance.

 What happens if a business doesn’t have worker’s compensation insurance?

Any business that doesn’t have worker’s compensation insurance is deemed illegal. As such, may be liable to penalties such as fines.

Conclusion

No doubt, you’ve been educated about the difference between a general liability insurance policy and a worker’s compensation insurance policy. You’ve seen where they can be applied and where they cannot be. Be on the safe side, sign up for an insurance policy for your business!