Small businesses are exposed to a wide range of risks, including workplace accidents, employee injuries, and claims of negligence or misconduct, which can have a considerable impact on their finances and reputation.

According to a November 2022 article on, private insurers are not permitted to provide workers’ compensation insurance in Ohio, Wyoming, Washington, or North Dakota. They are known as monopolistic states.

Employers’ liability coverage is not a part of workers’ compensation insurance in these states; instead, it is provided through an endorsement linked to a general liability policy. This type of insurance coverage is often referred to as stop gap coverage or stop gap liability insurance when included in a liability policy.

In this article, we will provide an in-depth guide to stop gap liability insurance for owners of small businesses. We will discuss what stop gap liability insurance is, why small businesses need it, and how it provides coverage for workplace injuries and illnesses.


What is Stop Gap Liability Insurance?

Stop gap liability insurance is a form of insurance that covers occupational accidents and diseases that are not insured by workers’ compensation. This type of insurance is often required by state law or by clients who hire independent contractors or temporary employees.

In a 2022 post by The Hartford, it was noted that although stop gap liability insurance is not mandatory like workers’ compensation insurance, it is crucial coverage for business owners. Stop gap insurance safeguards against potential lawsuits that may be filed by an employee or their family due to a work-related injury or illness.

Stop gap liability insurance is designed to provide coverage for employers who are not required to carry workers’ compensation insurance. In some states, workers’ compensation insurance is only required for companies with a certain number of employees or for certain types of businesses.

For businesses that are not required to carry workers’ compensation insurance, stop gap liability insurance can provide similar protection against workplace injuries and illnesses.

Why Small Businesses Need It

Small businesses may face significant financial risks if they are sued by an employee or contractor for workplace injuries or illnesses. Stop gap liability insurance can provide protection from these risks and may also be required to comply with state laws or contract requirements.

According to a 2022 study by the U.S. Bureau of Labor Statistics, private-sector employers reported 2.6 million occupational illnesses and injuries in 2021. With 2.7 incidents per 100 full-time employees, the incidence rate of all recordable cases in the private sector did not change from 2020.

Stop gap liability insurance can give small business owners peace of mind in addition to cash security. Knowing that their employees and contractors are covered in the event of a workplace injury or illness can help small business owners focus on growing their businesses and serving their customers.


Understanding the Coverage

Workers’ compensation insurance does not cover illnesses and injuries that occur on the job. Thus, stop gap liability insurance offers coverage. Injuries or diseases that develop while an employee or contractor is working on a job site may fall under this category.

Stop gap liability insurance often covers illnesses and injuries that are caused by accidents or carelessness on the employer’s part. This may include injuries caused by unsafe work conditions, defective equipment, or other hazards in the workplace.

Choosing the Right Policy

When choosing a stop gap liability insurance policy, it is important to consider the extent of protection provided, the cost of the policy, and any exclusions or restrictions that may be applicable. Small business owners should contact an experienced insurance agent to determine the optimum coverage for their requirements.

A stop gap liability insurance policy’s amount of coverage might vary based on the insurer and the individual policy. Small business owners should carefully review the coverage provided by each policy they are considering and ensure that the policy covers their specific needs.



Stop gap liability insurance may provide valuable protection for small businesses, but it’s critical to understand what it covers and how it works. By choosing the right policy and working with an experienced insurance agent, small business owners can protect themselves and their employees from potential financial risks.

Understanding stop gap liability insurance completely can help small company owners make knowledgeable choices regarding their insurance requirements, eventually bringing protection and peace of mind to their enterprise.

With the proper coverage in place, small company owners can focus on developing their businesses and servicing their clients without worrying about the possible risks involved with occupational accidents and illnesses.