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What is stop gap coverage?

Stop gap coverage is used by businesses to cover litigation by employees who receive injuries on the job. Although workers’ compensation insurance covers work-related injuries and illness, not all states provide policies that include employers liability insurance, which protects an employer if an employee sues for amounts beyond what workers’ compensation covered. Stop gap coverage provides protection in these situations.

Employers in certain states have gaps in liability coverage and should purchase stop gap coverage to protect them from employee lawsuits. Potential lawsuits that are covered by gap insurance include dual capacity actions, third-party suits, public tort claims, intentional endangerment, and injury claims.


Learn more about stop gap coverage

When do I need to be aware of stop gap coverage?

If you are a business owner in a state that does not offer employers liability insurance, you need to be aware of stop gap coverage. For example, if you live in North Dakota, which does not have liability insurance, you will want to purchase gap coverage. This would protect you in the event an employee gets injured on the job and sues you for medical care and wage loss not covered by regular workers’ compensation insurance.

What is important to know about stop gap coverage?

Not all employers know about stop gap coverage, but it is important to understand it, especially if you own a business in certain states. There are some other important items you should know about stop gap coverage:

  • Stop gap coverage is required in monopolistic states that do not offer employers liability insurance, and currently these four states are North Dakota, Ohio, Washington, and Wyoming.
  • In the other states that are not monopolistic, stop gap coverage is folded into an employer’s workers’ compensation policy.
  • Gap insurance covers an employer if:
    • an employee opted out of workers’ compensation benefits
    • the employee has an illness unrelated to employment
    • the business is an industry that does not have workers’ compensation or
    • the employer failed to provide a safe environment that resulted in injury