Staffing agencies that place workers in monopolistic workers’ compensation states face a specific coverage gap. In North Dakota, Ohio, Washington, and Wyoming, workers’ compensation from the state fund pays medical costs and lost wages. But it does not include employer liability protection.
That gap can leave staffing firms exposed if an employee alleges unsafe working conditions or occupational disease caused by negligence. With stop gap liability insurance, however, staffing firms have the employer liability protection they need in monopolistic states. But what is stop gap insurance, and how does it fit into a staffing program? Let’s take a closer look.
What Is Stop Gap Insurance?
In most states, employers liability is included with workers’ comp. In monopolistic states, however, employers must buy workers’ compensation through a state fund, and those policies do not include employers liability.
To close that gap, staffing firms can add stop gap coverage to their general liability policy. This coverage responds when an employee alleges that the employer:
- Failed to provide a safe workplace
- Did not address known hazards
- Contributed to an occupational disease through negligence
Do you have staffing agency clients that employ or place workers in monopolistic states? Stop gap coverage brings their protection closer to what they would have in non-monopolistic states.
Why Staffing Agencies Need Stop Gap Coverage
Staffing agencies often have higher employer liability exposure than a single-site employer. Their employees work at multiple client locations, under various supervisors, and in a diverse range of environments.
Suppose a staffing client operates in or places workers in Ohio, Washington, North Dakota, or Wyoming. If the firm does not carry stop gap coverage, it could face uncovered employer negligence claims. A worker may claim that unsafe conditions at a client site or a lack of proper protection or training led to injury or disease. When that happens, the staffing firm is often named in the claim, not just the client.
Stop gap liability insurance helps protect the staffing agency when these allegations arise in monopolistic states. It can respond to claims of negligence or unsafe conditions that fall outside the benefits handled by workers’ compensation. Many client contracts in these states also require evidence of this coverage.
How Stop Gap Liability Works
Stop gap coverage does not stand on its own as a separate policy. It is attached to the general liability policy and works alongside the state workers’ compensation program.
The state fund policy still pays for medical treatment and lost wages arising from work-related injuries or illnesses. Stop gap responds when an employee sues the employer for negligence related to those conditions.
Key elements typically include coverage for:
- Bodily injury by accident
- Bodily injury by disease (with aggregate and per-employee limits),
- Legal defense costs for covered employer negligence claims
By filling the employer liability gap left by monopolistic workers’ compensation systems, stop gap keeps staffing agencies more fully protected and aligned with typical coverage in other states.
Coverage Availability in Monopolistic States
Stop gap liability coverage is relevant only in North Dakota, Ohio, Washington, and Wyoming. In these monopolistic workers’ compensation states, employers purchase workers’ compensation directly from a state fund and must address employer liability separately. This overview of workers’ compensation monopolistic states explains how these systems work and why additional coverage may be needed.
For staffing agencies that place workers or have operations in these states, stop gap liability coverage is a core requirement, not an optional add-on. Agents should confirm where their clients operate and make sure stop gap is part of the program if any of these four states are involved.
Partnering With WWSP for Staffing Expertise
Staffing agencies require insurance programs that accurately reflect their operations across various clients, states, and job types. World Wide Specialty Programs focuses on the staffing sector and understands how stop gap liability insurance fits with general liability, professional liability, and other key coverages.
When agents partner with WWSP, they gain access to underwriting experience, program design support, and coverage options tailored to staffing-related exposures. Reach out today to discuss a stop gap liability quote or to review how your staffing clients’ programs handle monopolistic state exposures.
FAQ on Stop Gap Liability Insurance
What does stop gap coverage provide?
Stop gap coverage provides employers liability protection for lawsuits where employees allege injury or occupational disease caused by employer negligence in monopolistic workers’ compensation states.
What is not covered by gap insurance?
Stop gap does not cover intentional acts, injuries already handled under workers’ compensation benefits, or illnesses that are not related to work.
How does stop gap work?
Stop gap attaches to a general liability policy and adds employers liability protection in monopolistic states, where the state workers’ compensation fund does not include that coverage.
How much does stop gap liability insurance cost?
Pricing depends on factors such as the state, number of employees, industry class, and policy limits. Agents can work with World Wide Specialty Programs to obtain a quote that reflects each staffing client’s specific operations.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and are committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.