When discussing workers’ compensation coverage, monopolistic states are states that do not allow private insurers to sell workers’ compensation. Instead, they require businesses to purchase coverage from the government. In these states, there is no competition in terms of workers’ compensation coverage.
The problem that most employers have in these states is that the government does not supply employers liability insurance in addition to workers’ compensation. In these states, you need stop gap liability insurance.
What Is Stop Gap Insurance?
Stop gap coverage refers to the fact that you are filling a gap in your insurance coverage. In the case of workers’ compensation, you are filling in the general liability gap. It provides you with extra protection when someone is injured while performing his or her job.
What Does Stop Gap Insurance Cover?
Stop gap insurance protects your business from allegations that you did not take proper steps to protect your employees. Most workers’ compensation policies include a clause about employer liability. This clause prevents employers from being held accountable for worker injury. Without stop gap insurance, your employee could hold you liable for his or her injuries.
If you live in a monopolistic state, then you need to purchase stop gap coverage. Without it, an employee could file a lawsuit against you, holding you accountable for his or her injuries.