Comparison
Workers' Comp vs. General Liability: What's the Difference?
Workers' compensation and general liability are separate, non-substitutable policies: workers' comp covers your own employees' work injuries, while general liability covers third-party bodily injury, property damage, and related claims from your business operations. Most operating businesses with employees carry both policies together.
Business owners often assume one liability policy covers every risk, but workers' compensation and general liability insurance protect against two different kinds of claims. Workers' comp is a statutory, no-fault system: it pays medical care and a portion of lost wages to your own employees when they are hurt or become ill because of their job, and in exchange it generally limits an employee's ability to sue you directly over that injury. It is required in nearly every state once a business has employees, though the exact employee-count threshold that triggers the requirement varies by state.
General liability insurance, by contrast, responds to claims brought by people outside your workforce -- customers, vendors, delivery drivers, or members of the public -- who are injured or whose property is damaged because of your business operations, products, or premises. It also typically covers personal and advertising injury claims, such as libel or copyright infringement in your marketing. General liability is not usually mandated by state law the way workers' comp is, but landlords, lenders, and client contracts frequently require proof of it before you can sign a lease or start a job.
The options
Workers' Compensation Insurance
Statutory, no-fault coverage for your own employees' work-related injuries and illnesses.
Pros
- Pays injured employees' medical bills and a portion of lost wages
- Generally required by state law once you have employees
- Employer's Liability portion (often limits such as $100,000/$500,000/$100,000) adds protection against certain related lawsuits
- Covers rehabilitation and death benefits for dependents
Cons
- Does not cover injury or property damage to customers, vendors, or the public
- Does not cover damage to your own business property or product-liability claims
- Premium is tied to payroll and class code and can rise after claims
Best for
- Any business with W-2 employees
- Employers required by their state to carry coverage
- Businesses in states requiring it even at very small headcounts
General Liability Insurance
Covers third-party bodily injury, property damage, and related claims arising from your operations, products, or premises.
Pros
- Covers a customer's or visitor's injury at your premises or job site
- Covers property damage your business causes to others
- Covers personal and advertising injury claims
- Often required by landlords or client contracts before work can begin
Cons
- Does not cover your own employees' work injuries
- Cannot satisfy a state workers' comp mandate
- Typically excludes professional errors, which need separate coverage
Best for
- Any business that interacts with customers, vendors, or the public
- Businesses required to show proof of liability coverage in a lease or contract
- Companies wanting protection from third-party lawsuits
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Side by side
| Feature | Workers' Compensation Insurance | General Liability Insurance |
|---|---|---|
| Who it protects | Your employees | Third parties: customers, vendors, the public |
| Typical trigger | Work-related injury or illness | Bodily injury or property damage from your operations |
| Legally required | Yes, in nearly every state once you have employees | Not usually required by state law, but often required by contract or lease |
| Pays medical bills | Yes, for the injured employee | Yes, for an injured third party, subject to policy limits |
| Pays lost wages | Yes, a portion of the employee's wages | No |
| Covers lawsuits | Employer's Liability portion covers certain related suits | Yes, defends and pays covered third-party lawsuits |
| Premium basis | Payroll and class code | Revenue, payroll, or location count, depending on class |
| Can replace the other policy | No | No |
The bottom line
Workers' compensation and general liability solve different problems, and neither can substitute for the other. If you have employees, workers' comp is very likely required by your state regardless of what other coverage you carry. Most operating businesses carry both policies together, often placed through the same agency, because a single incident on your premises can trigger a claim under either policy depending on who was hurt. Compare multiple carriers to see what combination of coverage and pricing fits your specific operations.
Frequently asked questions
Can general liability insurance replace workers' comp?
No. General liability covers third-party claims, not your own employees' work injuries, so it cannot satisfy a state's workers' compensation requirement.
Do I need both policies if I only have one employee?
Many states require workers' comp once you have even one employee, and general liability is separately worth carrying if your business interacts with customers or the public. Check your state's specific employee-count threshold.
Does workers' comp cover a customer who slips and falls in my store?
No. That is a general liability claim because the injured party is a customer, not your employee.
Are these two coverages ever combined into one policy?
They are usually issued as separate policies, though an agency will often place workers' comp alongside a general liability and property policy for the same business.
Which one do clients usually ask to see proof of?
Clients most often ask for proof of general liability insurance and, if you have employees, proof of workers' comp as well.
Last reviewed · Reviewed by Provident Financial Group licensed agents
Compare up to 10 carriers in minutes.
One application goes out to every carrier we can access for your class of business. You get a ranked comparison you can review and purchase online — with a licensed agent available whenever you want one.
Mon–Fri, 8:00am–6:00pm ET · Independent agency licensed in 23 states