Does my general liability insurance policy cover me for worker’s compensation?
Commonly I hear from business owners that they thought that their general liability (GL) insurance coverage provides protection for their employees for workman’s compensation.
This is a common misconception. A general liability insurance policy and a worker’s compensation insurance policy will always be separate policies.
In order to protect your business you will need to have both policies if you have an employee or employees.
At first I could not understand why customers would assume that their liability coverage is providing coverage for worker’s compensation.
But I thought about it and realized that most general liability policies are based on payroll, and therefore business owners might assume that the policy is covering the employees if they are injured on the job.
This is not the case. General liability insurance provides protection if your business causes property damage or injury to others. This GL policy provides protection if the injury or damage is caused by employees of the business.
The reason that the liability coverage is based on payroll, is so that the business that has $100,000 in payroll pays less in insurance premium then a business that pays $1,000,000 in payroll.
Generally speaking, the business that has more payroll is doing more jobs, therefore there is a greater chance of an injury or property damage.
Worker’s compensation insurance coverage is a policy designed to cover the employees if they are injured while working on the job.
In Maryland, if you have at least one employee, then you are required to provide them with this benefit.
If an employee is injured on the job and you are not providing worker’s compensation benefits then you are not only responsible to pay their medical bills for the injuries and their loss time but you are also subject to a fine from the State of Maryland, which could be quite substantial.
Worker’s compensation insurance premiums are composed based on the amount of payroll and the type of work the employee is completing.
Therefore, a clerical employee will cost less for workers compensation then a roofing employee.
So, remember even though your GL insurance policy might be based on payroll, that does not mean that they policy is providing coverage if the employee is injured on the job.
You will need a separate worker’s compensation policy for this coverage.
Understanding your insurance coverage is very important for business owners and you need a professional insurance agent to help guide you through the process. Not only are general liability and worker’s compensation important for your business, but there are other coverages such as:
You work too hard for your business to have it suffer financially because you did not have the proper insurance protection.
Nancy Nicklow is the owner and President of Huff Insurance, a full service Independent Insurance Agent . We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance products. Call us at 410-647-1111