It’s easy to overlook stop gap insurance coverage until a client expands into a monopolistic state or faces a lawsuit over a workplace injury. That’s when gaps in employer liability insurance become a real and costly problem. In states where workers’ comp is only available through a state fund, the standard policy stops short of covering lawsuits from injured employees. Stop gap coverage is designed to fill that gap. Landmark Wholesale helps agents secure this essential coverage as part of a broader strategy for tough-to-place and multi-state accounts.
What Is Stop Gap Coverage?
Stop gap coverage is an endorsement or standalone policy that fills a specific gap in workers’ compensation insurance. In monopolistic states, the state provides workers’ comp benefits, but it does not include employer’s liability — coverage that protects businesses if an employee sues for negligence related to a work injury. Stop gap coverage provides the missing employer liability protection and ensures the client’s insurance strategy is truly comprehensive.
Monopolistic States and Coverage Pitfalls
Only four states — North Dakota, Ohio, Washington, and Wyoming — are considered monopolistic. In these states, employers must purchase their workers’ compensation insurance directly from a state-run fund. These policies do not include employers liability, creating a blind spot that many agents may not notice until a client is already at risk.
Without stop gap coverage, a business operating in one of these states is exposed if an employee files a lawsuit. The workers’ comp policy may cover medical costs and lost wages, but it won’t protect the employer from legal costs or settlements stemming from negligence claims. Stop gap coverage provides that protection and should be considered whenever clients are expanding into, hiring in, or contracting within a monopolistic state.
When Should Agents Recommend Stop Gap Coverage?
There are several situations where agents should include stop gap coverage in their proposal:
- A client is opening operations in a monopolistic state
- A business is hiring remote employees or contractors located in one of those states
- The insured operates in high-touch industries like staffing, hospitality, security, or transportation, where employer liability exposure is higher
- The client has a history of employment-related claims or litigation, increasing the need for broader protection
- The account is multi-state, and employer liability is already built into some policies but excluded in monopolistic states
Many agents working outside these four states may not be familiar with the implications of monopolistic coverage. But with the rise of remote work, mobile workforces, and interstate operations, it’s increasingly important to include stop gap in your risk assessment.
Don’t Let Clients Get Caught Off-Guard
Even a well-managed business can be blindsided by an employer liability claim. The key is to build this coverage into your process so it becomes second nature, especially with complex or growing accounts.
Landmark helps agents navigate these scenarios every day. We provide access to specialty markets that offer employer liability solutions in monopolistic states. We’ve successfully placed multi-state staffing firms, mobile contractors, and transportation clients that required a tailored combination of stop gap and alternative market coverage. Our underwriters work with agents to understand each risk’s full footprint and avoid gaps before they become problems.
Need a stop gap solution for a tough-to-place client? Send us a submission or get appointed today to explore how Landmark can support your agency with smarter workers’ comp placements.
About Landmark Wholesale
Landmark is a nationally licensed facility for tough-to-place risk with a focus on securing alternate workers’ comp solutions. From PEOs to specialty programs, we offer access to coverage solutions other wholesalers can’t. Our recent placements include complex risks in staffing, transportation, and construction sectors — demonstrating our ability to secure coverage where others fail. Partner with Landmark Wholesale to find solutions for your toughest accounts and expand your market reach.
