All employers, including staffing agencies, must create a safe, functional environment for their workers. To help businesses avoid litigation and employees receive care, workers’ compensation insurance covers medical expenses and lost wages associated with work-related injuries. However, in the case of alleged negligence, employees can file a lawsuit against their employers. Stop gap liability insurance is available to defend companies against those costs.
Stop Gap Liability Insurance Defined
In 2021, workers reported over 2.5 million work-related injuries. Without workers’ compensation or employer’s liability, employers would face millions of injury-related lawsuits. However, not all businesses have employer liability coverage and would have to rely on stop gap liability insurance.
In four states, companies don’t have employer’s liability protections because they are monopolistic. In monopolistic states, businesses purchase workers’ compensation from the state fund, but the state fund does not cover the employer’s liability.
The four monopolistic states include:
- North Dakota
- Ohio
- Washington
- Wyoming
Imagine your staffing industry client doesn’t have an employer’s liability policy or stop gap insurance and places a temporary employee with a hospital. The hospital’s management does not provide adequate training or safety gear to its staff, resulting in the employee contracting a preventable illness. In addition to collecting workers’ compensation, the employee files a lawsuit against staffing agency, claiming negligence. Without stop gap coverage, the agency would be responsible for all the associated legal fees and settlements.
Tailoring Stop Gap Liability for Staffing Agencies
Businesses can tailor their staffing company insurance to their specific needs. All workers in every industry risk injury regardless of whether they work behind a desk, on a hospital floor, or at a construction site.
New recruits and current employees look to their employers for protection. If workers do not feel as though their employer will go the extra mile to protect their safety and to care for them if they become injured, they may not feel as loyal to the company.
While all agencies may need stop gap liability insurance, they do not all need the same coverage. For example, an agency that places workers in an office building may require less coverage than an agency that hires construction workers.
Gaps in Client Policies
The role of an insurance agent is to protect client companies as much as possible. Agents must express the benefits, disadvantages, and limitations of workers’ compensation and stop gap liability. When workers’ compensation isn’t enough, stop gap picks up where workers’ compensation leaves off.
Workers under staffing agencies technically have two businesses responsible for their safety. Some staffing agencies may think that the workers can only file lawsuits against the client company, but staffing and client companies often share many of the same obligations to the worker. Stop gap liability is seamless protection for temporary workers.
Offering stop gap liability insurance protects businesses from paying out of pocket for potential lawsuits due to injuries sustained in the workplace. Contact us to learn more about the advantages of offering stop gap liability for your staffing industry 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.