Do You Need a Stop Gap Endorsement?
You might not be aware that there are four states requiring all workers’ compensation coverage be purchased directly by the employer through their respective state fund. Coverage can’t be purchased directly from an insurance company. Those states, which are called monopolistic states, are North Dakota, Ohio, Washington and Wyoming.
The standard workers’ compensation policy contains a few different sections. Part one is the workers’ compensation section and part two is the employers’ liability section. The policy that’s purchased through the state fund only provides coverage for workers’ compensation.
Employers’ liability, which protects a company when suits are filed against them for employment-related issues not compensable under workers’ compensation coverage, isn’t provided or available through the state fund.
This creates an important gap in coverage. Fortunately, it can be easily resolved by adding a stop gap endorsement to either your non-monopolistic workers’ compensation policy or your general liability policy. The stop gap endorsement provides the missing employers’ liability coverage for those work-related injuries arising out of exposures in the monopolistic states.
Don’t forget to let your insurance advisor know if you have employees in any of these four states so the appropriate coverage can be added.
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