How does a stop gap work? Stop gap insurance responds when a staffing firm is found negligent in providing a safe and healthy work environment, a liability that a state-run workers’ compensation policy does not cover on its own. Insurance agents evaluating a workers’ comp staffing program need to look beyond the workers’ comp policy itself and ask whether the employer liability component is missing, and whether the staffing firm’s operations call for stop gap insurance to fill it.
Identify Coverage Gaps Early
A standard workers’ compensation policy pays medical bills and lost wages for an injured employee. It does not respond to a separate allegation that the employer failed to keep the workplace safe in the first place. That distinction is the entire reason stop gap insurance exists: It covers employer liability for work-related bodily injury or disease, beyond what the workers’ compensation law itself requires.
This gap is easy to miss because the workers’ compensation policy still appears to be doing its job, paying claims as expected. At the same time, the employer liability component remains uncovered beneath it. Agents who ask about employers liability coverage directly, rather than assuming a workers’ compensation policy includes it, catch this gap before a claim does.
Review State Operations Carefully
The gap is most evident in monopolistic workers’ compensation states. According to the National Association of Insurance Commissioners, most states allow private insurers to compete for workers’ compensation business, but North Dakota, Ohio, Washington, and Wyoming require employers to buy workers’ compensation exclusively through a state fund, and that state-run coverage does not include employers liability protection.
A staffing firm headquartered outside these four states is not automatically exempt. Agents should ask where a staffing client places workers, not just where the client’s office sits, since a single assignment in one of these four states can leave that placement without employer liability coverage.
Evaluate Employer Liability Risks
Employer liability exposure lives at the worksite, not in the policy. Agents should ask who controls day-to-day safety conditions where the staffing firm’s employees actually work: the staffing firm, the client company, or some mix of both. A placement in a physically demanding role at a client’s facility carries a different safety profile than an office placement, and that difference should inform whether stop gap insurance is a priority or an afterthought.
It also helps to ask what happens after an injury. Workers’ compensation benefits addressing the injury itself do not resolve a separate claim that the employer failed to provide a safe environment, and that second claim is exactly what stop gap insurance is built to answer.
Strengthening Coverage Recommendations
One detail agents sometimes miss: stop gap coverage is not sold as a standalone policy. It requires an underlying general liability policy already in place, as stop gap is added onto that program rather than written on its own. Confirming a staffing client already carries general liability is a necessary first step before stop gap insurance can even be quoted.
From there, the recommendation comes down to a short list of questions. Where does the staffing firm place employees, and does that footprint include North Dakota, Ohio, Washington, or Wyoming? Who controls safety conditions at each site? Is general liability already in place? Contact us today to talk through stop gap insurance options for your staffing clients.
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.