The short answer
General liability covers damage and injury you cause to other people and their property. It generally does not cover an injury to a person working for you, which is what workers compensation is for. That gap is where most small employers get caught.
What general liability actually does
It responds when your work hurts somebody else or damages something that is not yours. A customer trips over your extension cord. A dropped tool goes through a windshield. Water from your demo runs into the neighbor's unit.
It pays for the defense as well as the damage, which is often the larger half.
The gap that surprises people
General liability almost always excludes injury to your own employees. That is not an oversight, it is the design. Employee injuries are what workers compensation is for.
So an employer with general liability and no workers comp is covered for hurting a stranger and uncovered for hurting the person they hired. Read the exclusions, or ask your agent to read them to you.
Your own work is usually excluded too
Most policies exclude the cost of redoing your own faulty work. If a wall is built wrong, insurance is not going to pay to build it again.
What it may cover is the damage that faulty work caused to something else. The wall is yours to fix. The floor the wall fell on may be a claim.
If you hire a contractor with their own crew
Ask for a certificate of insurance showing general liability and workers compensation, and check the dates and the company name.
For a bigger job, being named as an additional insured on their policy is a normal request. It means their insurer is defending you as well if something goes wrong on your property.
Homeowners policies are not the same thing
A homeowners policy has liability in it, and it may respond to a guest being hurt. Paid work on the property is treated differently and is often limited or excluded.
If you are hiring people at your house more than once in a while, ask your agent directly what your policy does and does not do for paid help.
The one call worth making
Ask your agent three questions. Does my policy cover a person I hire for a day. What happens if they are hurt on my site. What happens if they damage something belonging to somebody else.
Whatever the answers are, get them in an email. An agent's verbal reassurance is worth nothing at claim time.
This guide is general information, not legal, tax, or insurance advice. Rules differ by state and by situation, so talk to your own professional before you rely on it.