How do general liability and workers’ compensation insurance differ?
What is General Liability Insurance?
General liability insurance is a policy designed to protect businesses from various claims that can arise during normal operations. These claims typically include:
- Bodily injury: Injuries sustained by a third party (not an employee) on the business premises or as a result of business operations.
- Property damage: Damage to a third party’s property caused by the business or its employees.
- Personal and advertising injury: Claims related to libel, slander, or copyright infringement.
General liability insurance does not cover injuries sustained by employees while performing their job duties. It is primarily intended to protect the business from lawsuits and financial liabilities resulting from accidents or incidents involving non-employees.
What is Workers’ Compensation Insurance?
Workers’ compensation insurance is a state-mandated program that provides benefits to employees who suffer job-related injuries or illnesses. The primary purposes of workers’ compensation are:
- Medical benefits: Covering the cost of medical treatment for work-related injuries or illnesses.
- Disability benefits: Providing partial wage replacement for employees who are unable to work due to their injury or illness.
- Rehabilitation benefits: Funding for necessary rehabilitation services to help injured employees return to work.
- Death benefits: Providing financial support to the dependents of an employee who dies as a result of a work-related injury or illness.
Workers’ compensation insurance is specifically designed to cover employees and is a legal requirement in most states for businesses with a certain number of employees.
Key Differences Between General Liability and Workers’ Compensation Insurance
There are several differences between general liability and workers’ comp insurance, such as:
Coverage
General Liability Insurance: Covers claims from third parties (non-employees) for bodily injury, property damage, and personal injury.
Workers’ Compensation Insurance: Covers medical expenses, lost wages, and rehabilitation costs for employees injured on the job.
Beneficiaries
General Liability Insurance: Benefits third parties who are not employed by the business.
Workers’ Compensation Insurance: Benefits employees of the business who suffer work-related injuries or illnesses.
Legal Requirements
General Liability Insurance: Not usually mandated by law, but highly recommended and often required by clients or partners.
Workers’ Compensation Insurance: Legally required in most states for businesses with a certain number of employees.
Purpose
General Liability Insurance: Protects the business from financial losses due to claims by third parties.
Workers’ Compensation Insurance: Provides financial and medical support to employees injured at work, protecting both the employee and the employer from potential lawsuits.
Why It Matters
Understanding the difference between these two types of insurance is essential for both employers and employees. Employers need to ensure they have the appropriate coverage to protect their business and comply with legal requirements. Employees should be aware of their rights and the benefits available to them if they are injured on the job.
If you have questions about an injury sustained at work or need clarification on your rights and benefits, it is advisable to consult with an attorney who specializes in workers’ compensation law. They can provide personalized guidance and help ensure that you receive the appropriate benefits and protections.
While general liability insurance and workers’ compensation insurance both provide crucial protections, they serve different functions and cover different risks. To learn more about workers’ compensation and how it differs from other types of insurance, or to speak to someone about a workers’ compensation situation, contact Shugarman & Mehring.
Shugarman & Mehring
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