General Liability vs. Workers Comp Insurance

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What to Know About General Liability?

As a business owner, you know that it is crucial for you to protect what keeps your business running. The main thing that you rely on is your employees. If they get hurt while on the job, you should have the proper protection in place to make sure they can seek the medical help they need, in the form of Workers Compensation insurance.

Also, General Liability insurance is an essential policy to have to protect your business from lawsuits for third parties, usually customers, resulting from bodily injury, property damage, or advertising liabilities (libel, slander, defamation). Having both of these insurance policies to protect you and your business is vital.

What is General Liability Insurance?

General Liability insurance is the most common sense type of policy for business owners to purchase when they start their business. General Liability insurance protects the company from claims that arise out of the following:

  • Bodily injury - such as a customer coming to the business premises and slipping on a wet floor, tripping over a crack in the sidewalk, or being burned by hot food.
  • Property damage - an employee is distracted while working on a customer's home and damages another portion of it.
  • Advertising liability - an employee without thinking posts a social media post on your business page about a competitor that results in a defamation lawsuit.

As you can see General Liability insurance is a crucial part of your insurance portfolio. Often states require this coverage, and if you happen to be a contractor who does work for any other contractor, they will most likely require that you carry it as well.

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What is Workers Compensation Insurance?

Workers Compensation insurance, usually a legal requirement for businesses that have a certain amount of employees (varies by state), is coverage for employees that sustain injuries or illnesses while on the job. It is a type of insurance that protects workers in the event of personal injury by assisting with wage replacement and medical treatment.

If an employee is injured while on the job they may need to take time off. Taking time off work means that employers will lose wages if not protected by Workers Compensation. Additionally, if an individual requires medical treatment, the financial consequences of personal injury can be even more significant.

While many personal injuries happen at the headquarters of your business, injuries can happen elsewhere while you are involved in a job-related activity. If for example, you are driving a vehicle and using it to carry out a job-related task, and you end up involved in an accident, you will be covered by Workers Compensation, if your business has it.

Many people are required to attend specific functions or go on business trips on behalf of their employers. When doing so, Workers Compensation is active, protecting employees wherever they go.

What are some Benefits of Workers Compensation?

There are various benefits that you will receive if you are injured while on the job:

  • Medical treatment: - will pay for medical expenses and recovery from a work-related injury. An injured party is also able to have any required medical treatment, related to the injury, covered. The costs of medical treatment can vary greatly depending on the injury and in some instances be exceedingly significant.

  • Wage replacement - if the employee is unable to continue working it will pay for those missed wages until they can get back to their job.

  • Rehabilitation and disability coverage: while you may eventually be able to return to work following an injury, you may not have fully recovered yet and may need to access rehabilitation services. In some instances, an injured party may not be able to ever return to work. If this is the case, they may need disability coverage to assist them in making ends meet while unable to work.

  • Liability expenses - if your business is sued due to a workplace injury or illness, Workers Compensation will pay for the legal fees.

Workers compensation will also cover funerals if the unforeseen happens and an accident results in death. The policy will also include dependent support payments (child support, alimony).

Workers Compensation is built upon the notion that an employee trades their ability to sue an employer in exchange for the benefits of insurance. This exchange is also part of a no-fault system in which, regardless of who’s fault the injured party will receive Workers Compensation and not be able to sue their employer. While this is the case, there are some instances in which they can sue their employer.

If an injured party believes that their employer has intentionally caused them harm, they can file an intentional tort. An intentional tort covers a broad range of types of harm such as battery, assault, fraud, defamation, and invasion of privacy.

How Are The Two Different?

While both General Liability insurance and Workers Compensation are important, they do cover different things and protect different parties.

  1. General Liability is meant to cover your business in the event of a lawsuit and will cover legal fees, expenses, settlements, and judgments.
  2. Workers Comp is designed to cover your employees for work-related injuries, for medical expenses and missed wages, as well as death-related benefits. Keep in mind it will also cover lawsuit related expenses for workplace injuries as well, not General Liability.

Why Your Business Needs Both?

Being a small business owner is a stressful thing and worrying about lawsuits, employee injuries, and what insurance policy will cover these does not need to be one of those stresses. Protect your business properly by having both of these vital insurance policies. Cover your business and employees so that you can sleep at night and know that you will continue to bring in profits tomorrow.

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