What Is Stop Gap Coverage?

What Is Stop Gap Coverage?

Stop Gap Coverage

In states that require businesses to purchase workers’ compensation policies from a state fund, there may be resulting gaps in protection. Stop gap coverage fills these holes to provide sufficient safeguards for your company.

This type of insurance is typically an add-on to a general liability plan but is sometimes a separate policy.

What States Have Monopolistic Workers’ Comp Funds?

Areas with these kinds of state funds do not allow private insurers to sell workers’ comp insurance. The following are monopolistic states:

  • Washington
  • Ohio
  • Wyoming
  • North Dakota

What Risks Does Stop Gap Insurance Cover?

Specific legal claims hold the employer liable for staff injuries. These include:

  • Consequential damage: This type of lawsuit occurs when a previous work injury causes a non-work injury later.
  • Dual capacity claims: These may arise when employees sustain damage from a product, building or service owned by their employer.
  • Third-party-over actions: A worker files suit against a third party for contributing to an injury.

Stop gap coverage protects your company from these kinds of liability claims. The workers’ compensation policies in monopolistic states cover illnesses, damages and wage losses but do not provide safeguards for employers’ liability exposures.

If you live in North Dakota, Washington, Wyoming or Ohio, you need to protect your staffing firm from potential financial loss with stop gap insurance.