Workers comp vs. general liability and other insurance

The short answer

Workers' comp covers your employees when they are hurt on the job. General liability covers other people, such as customers and the public, when your business causes them injury or property damage. Most businesses with employees need both, and one does not replace the other.

Part One: workers compensation

Part One of a standard policy pays the benefits your state's law requires. Unlike most insurance, it has no dollar limit. The insurer takes on your full legal duty to pay workers' comp benefits for covered injuries in the states listed on the policy.

Part Two: employer's liability

Part Two covers you when you are sued over a work injury in ways the workers' comp law does not block. It has dollar limits, often shown as three numbers such as $100,000 / $500,000 / $100,000. Common examples include:

• A third party, such as an equipment maker, is sued by your injured worker and then sues you.
• A worker's spouse sues for loss of companionship.
• A claim falls outside the workers' comp law in your state.

General liability

General liability pays when your business injures someone who is not your employee or damages their property. For example, a customer trips over a cord in your shop, or your crew breaks a client's window. It usually excludes injuries to your own employees because workers' comp is meant to cover those.

Disability and health insurance

Short-term disability and health insurance cover injuries and illnesses that are not work-related. A few states, including California, Hawaii, New Jersey, New York, and Rhode Island, require some form of disability coverage for off-the-job injuries or illness. Health plans usually exclude work injuries, which is why it matters that work injuries go through workers' comp.

Contractors and owners

Independent contractors need their own coverage. If an uninsured contractor's worker is hurt on your job, your workers' comp insurer may treat that worker as yours. Owners who are not covered by their own policy may need health or disability insurance for their own injuries.