Stop-gap coverage is employers liability insurance for businesses whose workers compensation comes from a state fund, as in Ohio, North Dakota and Washington, or, for Wyoming manufacturers, from the state’s Workers’ Compensation Division. It is usually added to a general liability or package policy and answers lawsuits tied to employee injuries that the fund’s coverage may not reach.
For a manufacturer, the question is not whether to buy workers compensation in these states. The state has already decided where most employers get it. The question is what the state fund’s coverage includes, what it leaves out, and how the rest of your insurance program is built around it. This guide takes each of the four states in turn, using what the funds and state law say themselves, and then walks through how stop-gap attaches to your program.
What stop-gap coverage is
A workers compensation policy bought from a private carrier normally has two parts. The first pays the benefits state law requires for an injured employee: medical care, lost wages, and related benefits. The second, employers liability, answers lawsuits that arise from a workplace injury but fall outside those benefits, such as a claim brought by a family member or a claim from a third party that seeks contribution from the employer.
When comp comes from a state fund, the first part is handled by the fund. The second part is the one to check. Stop-gap coverage is the name for employers liability written separately for employees in a state-fund state, most often as an endorsement to general liability or a package policy. Our page on workers compensation explains how the comp side works in the states where private carriers write it.
Why the state-fund states create the question
In states where private carriers write workers compensation, employers liability comes with the comp policy. In these states, the state fund is the source of comp for the employers its law requires to insure with it. The fund’s coverage is set by the fund and by state law, not by the policy forms a private carrier would use.
That changes who you ask. Instead of reading an employers liability limit on a private comp policy, you ask the fund what its coverage includes, and you ask your agent how the rest of the program answers anything it does not. The four states handle this differently, so each gets its own section below, and each links to our state page for manufacturers in that state.
North Dakota: Workforce Safety & Insurance
North Dakota Workforce Safety & Insurance (WSI) is the state fund, and WSI states plainly in its employer questions that North Dakota law does not allow private insurers to underwrite workers’ compensation insurance in North Dakota. A North Dakota plant gets its comp from WSI.
WSI is also direct about one limit. Its page on All States Coverage, the optional coverage it offers for North Dakota employers with employees working in other states, states that All States Coverage does not provide employer liability coverage. That is one of the reasons North Dakota manufacturers ask about stop-gap for their liability program. Our North Dakota page covers the rest of the state’s rules for manufacturers.
Ohio: the Bureau of Workers’ Compensation
Ohio’s system runs through the Ohio Bureau of Workers’ Compensation. Under Ohio Revised Code 4123.35, private employers pay premiums into the state insurance fund, and the same section provides for employers that qualify to self-insure. BWC’s own guide to types of coverage states that an Ohio employer with one or more employees must have workers’ compensation coverage.
For a manufacturer, that means the comp side of an Ohio plant is settled by statute, and the employers liability question is answered by asking BWC what its coverage includes and comparing that with what your customers, lenders, and landlords expect. Where the answer leaves a gap, stop-gap on the general liability or package policy closes it. Our Ohio page sets out the other rules that shape an Ohio program.
Washington: the Department of Labor & Industries
Washington’s comp runs through the state. The Washington Department of Labor & Industries (L&I) states on its page about who needs a workers’ comp account that Washington does not allow private workers’ compensation coverage, and that employers must buy their coverage from L&I or be certified self-insured employers.
For a Washington plant insured through L&I, the program we build places every line except comp: general liability with products-completed operations, property, equipment breakdown, and umbrella. Stop-gap employers liability belongs in that list, attached to the general liability or package policy and coordinated with the umbrella above it. Our Washington page explains how the rest of the program is written around L&I.
Wyoming: the Workers’ Compensation Division
Wyoming defines coverage by the kind of work. Its Worker’s Compensation Act, at Wyo. Stat. § 27-14-108, lists manufacturing, NAICS sector 31-33, as extrahazardous employment, and under § 27-14-202 each employer reports the payroll of its employees in extrahazardous employment, and makes its payments, to the worker’s compensation division within the Department of Workforce Services.
Employers outside the listed employments may elect coverage under the Act, and under § 27-14-108(j) an employer that elects must cover all of its employees. The statute does not say whether private insurers may write Wyoming comp, so a manufacturer should confirm its arrangement with the Division before deciding how employers liability is handled. Our Wyoming page covers the rest of the state’s rules for manufacturers.
How stop-gap attaches to your program
Stop-gap is usually written as an endorsement to your general liability or package policy that adds employers liability for employees in the state-fund states you name. Because it sits on the liability program, its limits should line up with your general liability and with the umbrella above it, so that a serious claim moves from one layer to the next without a gap.
Read the endorsement for three things: the states it names, the limits for each claim and in the aggregate, and any exclusions that differ from the employers liability section of a standard comp policy. If a customer contract requires a specific employers liability limit, the stop-gap endorsement is usually where you meet it for employees in these states. Our article on what an umbrella covers for manufacturers explains how the umbrella schedules the layers beneath it.
Real-World Scenario: A Washington fabrication plant carries comp through L&I and runs a general liability program with an umbrella. A machine operator is injured, and L&I handles the worker’s claim. Months later a lawsuit tied to the same injury names the company. The plant’s general liability policy carries a stop-gap endorsement for Washington employees, so the suit lands on a coverage part written for it, and the umbrella sits above that limit instead of the plant funding a defense on its own.
Multi-state manufacturers with employees in a state-fund state
The state-fund states can also reach manufacturers based elsewhere. A plant in a neighboring state that sends installers, field technicians, or a sales engineer into Ohio or North Dakota, or that opens a small operation in Washington or Wyoming, can find itself subject to the fund’s rules for that work. Each state decides when its law applies to work done inside its borders, so check with the fund before the work begins.
For those employers, the right answer is usually a combination: a private comp program for the home state, the state-fund state’s own coverage where its law applies, and a stop-gap endorsement naming the state-fund states on the liability program. Our manufacturing insurance page explains how we build multi-state programs, and our guide to what insurance your manufacturing customers require covers the employers liability limits that show up in customer contracts.
What to ask for
Before renewal, or before any employee starts work in one of these four states, ask these questions in order:
- What does the state fund’s coverage include, and does it address lawsuits tied to employee injuries?
- Which of your employees, crews, or sites fall under a state-fund state’s law, and for which work?
- Does your general liability or package policy carry a stop-gap endorsement naming each of those states?
- Do the stop-gap limits match what your customers, lenders, and landlords require, and does the umbrella schedule them?
- In Wyoming, which of your operations fall within manufacturing or another employment the Act lists as extrahazardous?
We answer those questions as part of every manufacturing program we write for plants and crews in these states. To start, request a quote with your locations and the states where your people work.