Many staffing agencies believe that workers’ comp is enough to cover their risks — but what happens when an employer liability claim falls outside those limits? Without proper stop gap liability insurance, they could be facing serious coverage gaps.
As an insurance agent, it’s your job to guide staffing firms through these complexities and help them understand how stop gap liability insurance complements workers’ comp for staffing companies.
Key Differences Between Workers’ Comp and Stop Gap Liability Insurance
At first glance, stop gap liability insurance and workers’ compensation insurance might seem interchangeable, but they serve different purposes in employee protection.
Workers’ compensation is a mandatory coverage that provides wage replacement and medical benefits to employees injured on the job. It aims to protect both employees and employers by covering medical costs and lost wages due to workplace injuries.
However, in monopolistic states — where employers must purchase workers’ comp insurance from the state, not private insurers — state-administered workers’ comp programs do not offer employer liability coverage. Stop gap liability insurance offers supplemental coverage that fills the gaps left by workers’ compensation policies, particularly in monopolistic states like North Dakota, Ohio, Washington, and Wyoming.
Without stop gap liability insurance, employers could be held personally liable if an employee files a lawsuit for workplace injuries.
When Do Staffing Agencies Need Stop Gap Liability Insurance?
Not every state requires stop gap liability insurance. But, for staffing agencies operating in monopolistic states, it’s essential.
Staffing agencies are particularly at risk because they often manage employees across multiple worksites and industries, exposing them to various hazards.
For instance, a staffing agency that places workers in high-risk jobs in Washington state may have workers’ compensation coverage through the state, but it won’t have employer liability protection. If an employee sues the staffing agency for negligence, claiming the work environment contributed to their injury, stop gap liability insurance would cover the legal costs and damages.
Additionally, staffing agencies that operate in multiple states need to be especially aware of where stop gap liability is necessary. Without this coverage in monopolistic states, they could face hefty legal fees and settlements that could have been avoided with proper insurance.
Advising Staffing Clients on Comprehensive Coverage
As an insurance agent, your role is to help your clients see the bigger picture when it comes to risk management. One effective approach is to recommend a layered coverage plan, integrating both workers’ comp and stop gap liability insurance into their overall risk strategy.
Start by assessing their business footprint. Do they operate in monopolistic states? Are their employees working in high-risk industries?
Once you understand their specific needs, you can help them fill the coverage gaps that workers’ compensation alone might leave. This approach ensures that all liability risks are covered, reducing unexpected legal claims.
Moreover, helping your clients understand their workers’ compensation policy limits — and how stop gap liability bridges those gaps — builds trust. Not only will they be better protected, but they will also appreciate your proactive approach to risk management.
Protecting Staffing Firms With the Right Coverage
In the end, staffing agencies need both stop gap liability insurance and workers’ compensation insurance to protect their businesses from all angles.
Each insurance type addresses different aspects of risk, and without proper coverage, your clients could face financial troubles.
Call World Wide Specialty Programs today to discuss how we can help you provide the best stop gap liability insurance solutions for your staffing agency clients.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and are committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.