General Liability vs Workers’ Comp: Third Parties Versus Your Own Crew
General liability explicitly excludes injury to your own employees. That exclusion is the reason workers’ comp is a separate, mandatory policy.
- General liability covers third parties; workers’ comp covers employees
- General liability contains an employer’s liability exclusion for employee injury
- Workers’ comp is state-mandated once you have employees; general liability is contract-driven
- Employer’s liability, Part Two of comp, covers suits outside the benefit schedule
- Most contracts require both, plus certificates naming the client
Who is on the other side of the claim
That is the whole distinction. A customer, a passer-by, a client whose property you damaged — general liability. Your own employee, injured doing your work — workers’ comp.
General liability makes this explicit through an employer’s liability exclusion. Employee injury is carved out precisely because comp is the policy meant to answer it.
One is a legal mandate, the other a business decision
Workers’ comp is required by state law once you have employees, with thresholds and exemptions varying by state and entity type. Penalties for operating without it include stop-work orders, per-day fines and personal liability for owners.
General liability is not generally mandated by statute, but it is effectively mandatory in practice — leases, client contracts, licensing boards and general contractors all require it.
The overlap nobody expects
Employer’s liability, Part Two of the comp policy, covers suits arising from employee injury that fall outside the statutory benefit schedule — most commonly a general contractor seeking indemnity after your injured employee sues them.
Check your general liability policy for an action-over exclusion, which removes coverage for exactly those employee-injury indemnity claims. Where it is present, the Part Two limit is doing all the work.
Subcontractors sit in both
An uninsured subcontractor is frequently treated as your employee for comp purposes at audit, adding their pay to your payroll basis. The same sub, injured, may pursue you directly.
Collect certificates from every sub before they start, verify comp is listed, and keep the certificates on file for the audit.