Stop gap coverage

The term stop gap coverage, or a stop gap endorsement, refers to an employer filling a gap in workers’ compensation insurance by purchasing an additional policy.

Stop gap coverage protects business owners from lawsuits filed over workplace injuries. Business owners are protected from such lawsuits by employer’s liability insurance, which is typically included in workers’ compensation coverage.

However, in states that require business owners to purchase workers’ compensation from a state fund, this coverage may be excluded.

The following states run monopolistic workers’ comp funds:

• North Dakota
• Ohio
• Washington
• Wyoming

Business owners usually only need to look into stop gap insurance if they are located in the above states. Otherwise, employer’s liability insurance is typically included in your workers’ compensation coverage at no additional cost.

Stop gap coverage provides protection against allegations that an employer has not provided a safe work environment. While workers’ compensation insurance pays for job-related injuries, employer’s liability is a separate clause of the policy. It protects the employer from being held liable for worker injury or illness.

A workers’ compensation policy from a monopolistic state fund does not include the part of the policy dealing with employer liability. To prevent a worker from holding the employer liable for an injury or illness, the employer should consider purchasing stop gap coverage from an insurance provider.

Insureon helps small business owners compare quotes for workers' compensation and other types of business insurance with one easy online application. Start an application today to protect yourself against the cost of a workplace injury lawsuit.