General Liability and Workers Comp Insurance for Small Businesses
If you run a small business, you’ve probably heard you need insurance. But which kind(s)?
General liability and workers compensation insurance protect your business from different risks. One is designed to cover injuries to customers or damage to their property. The other can cover injuries to employees.
Let’s break it down simply so you can safeguard all you’re building.
Key Points to Know:
- General Liability (GL) Insurance: Designed to cover third-party (client or customer) injuries and property damage; coverage in case your business causes harm to others
- Workers Compensation (WC) Insurance: Can pay for your employees’ work-related injuries or illnesses; a safety net if your staff gets hurt on the job
- Both are essential small business insurance coverages that help you stay in business even when the unexpected happens
General Liability vs Workers Comp Insurance: Quick Comparison Table
Here’s a simple explainer of workers comp versus general liability insurance.
| Feature | General Liability | Workers Compensation |
|---|---|---|
|
Can cover employee injuries? |
❌ No |
✅ Yes |
|
Can cover customer or client injuries? |
✅ Yes |
❌ No |
|
Can cover property damage you cause? |
✅ Yes |
❌ No |
|
Required by law? |
Usually no (but often required by contract) |
Yes, in most states, if you have W-2 employees |
|
Can cover legal defense costs? |
✅ Yes |
✅ Yes |
|
Example claim |
A customer slips and falls at your business |
An employee injures their back while lifting equipment |
What Does General Liability Insurance Cover?
General liability insurance financially protects your business from third-party claims, meaning people who are not you or your employees. Think of it as bubble wrap on your business if it accidentally causes harm to someone else.
Here’s what it typically covers (and what it doesn’t).
| Typically Covers | Doesn’t Cover |
|---|---|
|
Customer injuries (slips, falls, and accidents) |
Employee injuries |
|
Property damage you cause to others |
Damage to your own business property |
|
Legal defense costs for covered claims |
Professional mistakes (requires professional liability insurance) |
|
Settlements or judgments up to your policy limits |
Employee wage replacement |
|
Advertising injury (libel, slander, or copyright claims) |
Intentional acts of injury or property damage |
Real Claim Example
A fitness client accidentally tripped over an exercise ball during a class and was injured. The good news? The instructor had general liability insurance with Insurance Canopy to cover the cost of the claim: $42,500.
When Clients, Landlords, or Venues Require General Liability Coverage
Even if it’s not legally required, you often need general liability insurance to work. Many contracts require you to carry this coverage.
You may need it to:
- Lease commercial space
- Work vendor events
- Sign service agreements
- Rent booth space
- Work at a client’s property
At a minimum, many contracts require:
- $1 million per-occurrence limits
- A certificate of insurance (COI)
- Additional insured status for a qualified third party
Certificate of Insurance: How to Get Proof of GL Coverage
A certificate of insurance (COI) is proof that your coverage is active. A client, landlord, or event organizer verifies you meet their insurance requirements with this document. With Insurance Canopy, you receive instant COI access through your online dashboard after you purchase a policy.
Save your COI to your device. Then, send it to any individual or business that needs to confirm your coverage.
Learn more: How to Get a Certificate of Insurance for Your Small Business
What Does Workers Compensation Insurance Cover?
Workers compensation insurance is designed to protect your business if an employee is injured on the job. Think of it as coverage that enables you to take care of your staff if they get hurt while working for you.
Because it’s a “no-fault” coverage, employees don’t have to prove you were negligent for benefits to apply. Here’s what it typically covers.
| Typically Covers | Doesn’t Cover |
|---|---|
|
Medical bills for employee work-related injuries |
Customer injuries |
|
Lost wages while an employee recovers |
Property damage you cause to others, like clients or customers |
|
Rehabilitation and disability benefits |
Injuries outside of work |
|
Compensation if a spouse or family member’s relationship is affected |
Independent contractors (unless required or misclassified) |
|
Employer’s liability (for lawsuits for damages beyond standard workers comp benefits) |
Intentional harm or policy violations |
What Can Workers Comp Pay For?
If an employee is injured or becomes ill because of work, workers compensation insurance can pay for:
- Emergency room visits
- Surgery
- Prescription medication
- Physical therapy
- A portion of lost wages
- Disability benefits
- Funeral costs
How Does Employer’s Liability Coverage Work?
Workers compensation insurance often includes employer’s liability coverage. This protects your business if you’re sued for a work-related employee injury or illness.
Employer’s liability coverage can cover legal defense, settlements, and court judgments. Not every claim will trigger employer’s liability — it’s meant to kick in for lawsuits that go beyond the basic workers comp benefits required by your state.
State Requirements: Do You Legally Need Workers Comp?
In most states, you’re required to carry workers compensation insurance if you have W-2 employees. The rules depend on:
- Your state
- Your industry
- The number of employees hired
- Your payroll
If you don’t carry the required coverage, you may face fines or state penalties. For example, you can be issued a stop-work order for non-compliance.
Important: Workers compensation requirements vary by state. Always verify requirements with your state’s workers compensation board.
Sole Proprietors and Independent Contractors: When Workers Comp Is Required
If you’re a sole proprietor with no employees, you typically do not need workers compensation insurance.
When hiring independent contractors, always confirm they carry their own coverage. If your state determines they were misclassified, you could be responsible for their on-the-job medical expenses and potential penalties.
Learn more: Workers Compensation for Solo Business Owners
Do I Need General Liability, Workers Comp, or Both?
Use this flow chart to easily determine which coverages you need!
Explore more ways to protect what you’re building: What Kind of Coverage Does a Small Business Need?
How General Liability and Workers Comp Work Together
General liability and workers comp insurance protect your business from multiple angles.
Say your DJ business is ready to expand, so you hire staff for your next gig. Here’s how these coverages safeguard your spins:
- Your assistant trips over a cable and sprains their ankle → Workers comp
- A guest is injured after a speaker accidentally falls over → General liability
- Your table tips and damages the venue’s hardwood floor → General liability
- An employee injures their shoulder while loading gear and needs physical therapy → Workers comp
General liability is designed to cover third-party injuries and property damage, while workers comp can cover employee injury claims. Together, they help ensure one accident doesn’t derail your business and all the shows you have lined up.
Next Steps: Get a Quote for Workers Comp or General Liability Insurance
Getting a quote for workers compensation or general liability coverage is easy with Insurance Canopy. Fill out our online application and receive your quote in your inbox!
Start a Workers Compensation Quote
Get a custom quote! Be sure to have the following information for a smooth process:
- Your business’ legal status
- Your federal employer ID number
- Your annual payroll
- Information about other owners and partners to include or exclude from coverage
Explore General Liability Coverage
For many industries, our general liability policies are flat-rate priced and ready to buy!
Running a business means wearing many hats, but being an insurance expert doesn’t have to be one of them. Insurance Canopy is here to protect your business with easy-to-manage policies customized to your unique needs. Whether you need general or professional liability insurance, we’ve got your back — and we’re here to help you every step of the way.
Join the hundreds of thousands of businesses already trusting Insurance Canopy to protect their small business dreams!
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They provided clarity on the importance of insurance for a first time business owner in the cleaning space and provided clear insight next steps and options for coverage.
Evergreen Multiservices
February 2, 2026Extremely user friendly website, super affordable and very little time needed to apply.
Carl Sari
January 31, 2026Excellent company, Great service, the best!!!
Claudina Adams
January 15, 2026 -
Super affordable insurance for a small business like myself super happy to be able to provide this to my customers really helps of landing more gigs
Alex
January 5, 2026Really went the extra mile to find the appropriate coverage for my business.
Daisy B
January 2, 2026Canopy provided escatly what I neede to book the gig, and at a very affordable price.. Thank You!
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December 22, 2025 -
Easy. Convenient. Trustworthy. Came thru in a moments notice
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December 19, 2025Affordable liability insurance for DJ's. Easy to set up and understand. I've been with them for several years and am happy with their service.
Peter Flessas
December 14, 2025So easy to sign up. I hope I never have to use the insurance portion but most hotels require it for corporate gigs
Yuri Gonzalez
December 11, 2025 -
This company is great. They are very helpful and they have great prices for insurance options that cover what you need!
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I needed a portable policy as a yoga instructor. I found this company in an online search. Called and got details from them, was quite surprised at how affordable... Read More
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They provided clarity on the importance of insurance for a first time business owner in the cleaning space and provided clear insight next steps and options for coverage.
Evergreen Multiservices
February 2, 2026 -
Extremely user friendly website, super affordable and very little time needed to apply.
Carl Sari
January 31, 2026 -
Excellent company, Great service, the best!!!
Claudina Adams
January 15, 2026 -
Super affordable insurance for a small business like myself super happy to be able to provide this to my customers really helps of landing more gigs
Alex
January 5, 2026 -
Really went the extra mile to find the appropriate coverage for my business.
Daisy B
January 2, 2026 -
Canopy provided escatly what I neede to book the gig, and at a very affordable price.. Thank You!
Andy Anderson
December 22, 2025 -
Easy. Convenient. Trustworthy. Came thru in a moments notice
Eddie K
December 19, 2025 -
Affordable liability insurance for DJ's. Easy to set up and understand. I've been with them for several years and am happy with their service.
Peter Flessas
December 14, 2025 -
So easy to sign up. I hope I never have to use the insurance portion but most hotels require it for corporate gigs
Yuri Gonzalez
December 11, 2025 -
This company is great. They are very helpful and they have great prices for insurance options that cover what you need!
Jacob Serrano
December 6, 2025
FAQs About General Liability and Workers Comp for Small Businesses
Do I Need Workers Comp if I’m the Only Employee?
You typically don’t need workers compensation insurance if you’re a sole proprietor with no employees. Double-check your state’s workers compensation board for the exact rules.
Does General Liability Cover Employee Injuries?
No, general liability does not cover employee injuries or injuries you, the owner, sustain. It’s meant to cover injuries to others, such as clients, customers, or passersby.
Can a Client Accept General Liability Instead of Workers Comp?
A client cannot accept general liability instead of workers comp coverage, or vice versa, because they cover different risks. Ensure you carry the right coverage to meet client contracts and protect your business by verifying your policy documents.
How Much Do General Liability and Workers Comp Policies Cost for Small Businesses?
Costs for small business general liability and workers comp policies depend on:
- Industry risk
- Payroll (for workers comp)
- Revenue (for general liability)
- Claims history
- State requirements
Workers comp pricing is heavily influenced by class codes and experience modification (X-Mod), a metric that uses your past claims to determine your premium.
On average, Insurance Canopy’s general liability coverage costs $20/month.
Can I Bundle Both Policies With Insurance Canopy?
You can bundle both general liability and workers comp coverage with Insurance Canopy. Start a workers compensation application or contact us to get help creating your policy!
JoAnne Hammer | Program Manager
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.