Which statement about interaction with general liability is true?

Which statement about interaction with general liability is true?

• A. GL automatically cancels WC when active.
• B. WC is always primary over GL.
• C. They coordinate via provisions to avoid gaps or duplication; liability lines supplement WC.
• D. EL replaces GL coverage.

Answer: (C)

The important concept is that workers' compensation and general liability are designed to work together through coordination clauses to avoid gaps or duplication, with liability coverage serving to supplement what WC does not cover. Workers' compensation provides benefits to employees for work-related injuries, typically regardless of fault, while general liability covers third-party claims for bodily injury or property damage arising from the business’s operations. Because these are different risk areas, policies include provisions (often called other-insurance or coordination of benefits clauses) that specify how the coverages interact and which policy pays first. In practice, WC handles employee injury benefits, and GL fills gaps by covering non-employee liability or claims that WC doesn’t address, ensuring there’s no duplication and no uncovered exposure. For example, if an employee is injured, WC pays the employee’s benefits; if a customer is injured by the contractor’s work, GL steps in. The coordination language prevents double payment and clarifies how each policy responds. The other statements don’t fit because GL does not automatically cancel WC, WC is not always the primary over GL (coordination and allocation depend on endorsements and circumstances), and Employers Liability does not replace General Liability coverage.

The important concept is that workers' compensation and general liability are designed to work together through coordination clauses to avoid gaps or duplication, with liability coverage serving to supplement what WC does not cover. Workers' compensation provides benefits to employees for work-related injuries, typically regardless of fault, while general liability covers third-party claims for bodily injury or property damage arising from the business’s operations. Because these are different risk areas, policies include provisions (often called other-insurance or coordination of benefits clauses) that specify how the coverages interact and which policy pays first. In practice, WC handles employee injury benefits, and GL fills gaps by covering non-employee liability or claims that WC doesn’t address, ensuring there’s no duplication and no uncovered exposure.

For example, if an employee is injured, WC pays the employee’s benefits; if a customer is injured by the contractor’s work, GL steps in. The coordination language prevents double payment and clarifies how each policy responds.

The other statements don’t fit because GL does not automatically cancel WC, WC is not always the primary over GL (coordination and allocation depend on endorsements and circumstances), and Employers Liability does not replace General Liability coverage.