Your business carries workers’ compensation insurance. But does that mean you have coverage for every liability exposure arising from a workplace injury?

For businesses with employees in certain states, the answer deserves a closer look. State-funded workers’ compensation provides benefits to injured employees, but it generally does not include employers liability coverage.

That’s where stop-gap coverage comes into the conversation.

Why the State Matters

North Dakota, Ohio, Washington, and Wyoming operate monopolistic workers’ compensation systems. Employers subject to these systems generally obtain their workers’ compensation coverage through a state fund, unless an authorized alternative applies.

These state-fund policies do not include the employers liability protection typically found in private workers’ compensation policies. This can leave a gap in a business’s insurance program. Source: Indiana Compensation Rating Bureau

Two Coverages, Different Purposes

Workers’ compensation provides statutory benefits for covered work-related injuries and illnesses, including medical care and partial wage replacement.

Employers liability insurance addresses certain legal claims against an employer arising from an employee’s work-related bodily injury or disease.

Although workers’ compensation laws generally limit an employee’s ability to sue an employer over a workplace injury, those protections are not absolute. Whether a claim can proceed—and whether insurance responds—depends on the circumstances, applicable law, and policy wording.

How Stop-Gap Coverage Helps

Stop-gap coverage is designed to address the employers liability protection missing from monopolistic state-fund policies.

Depending on your insurer and existing coverage, it may be added through an endorsement to your general liability policy or an appropriate endorsement on a separate workers’ compensation policy.

For a covered claim, it may help pay legal defense costs, settlements, or judgments, subject to the policy’s terms and limits. It does not replace required workers’ compensation coverage or cover every employment-related lawsuit.

Expanding Into Another State? Review Your Coverage

Your headquarters may be in one state while your employees work in several others.

Opening a location, acquiring a business, hiring a remote employee, or sending a team to an out-of-state project can change your insurance needs. Don’t assume your existing employers liability coverage automatically applies to every new operation.

A coverage review can help confirm which states, businesses, and work activities are included—and where adjustments may be needed.

Questions Worth Asking

You don’t need to become an insurance expert to start a useful conversation. Ask your advisor:

• Do we have employers liability coverage everywhere our employees work?
• Are all relevant business entities and locations included?
• How do our coverage limits and legal defense provisions work?
• What exclusions or conditions should we understand?
• Does our current program need updating as our business grows?

Identify the Gap Before a Claim

Having workers’ compensation in place is essential. Understanding how it works alongside your other liability policies is just as valuable.

At Pinnacle Risk Solutions, we help businesses evaluate their coverage and make informed decisions as their operations change.

Have employees working in North Dakota, Ohio, Washington, or Wyoming? Contact Pinnacle Risk Solutions to discuss whether stop-gap coverage belongs in your insurance program.

Coverage is subject to policy terms, conditions, exclusions, and applicable state law.