Understanding the Difference Between Workers’ Compensation and Stop Gap / EPLI

When we sit down with business owners, one of the most common areas of confusion we see is around Workers’ Compensation Stop Gap/Employers Liability, and EPLI coverage. They all sound similar as they all deal with employee issues. But they are not the same — and understanding the differences can prevent a very expensive surprise.

At Haughn Insurance, we help employers make sure there are no gaps in protection. Let’s break this down in a practical, broker-level way.

  1. The Core Concept

Workers’ Compensation (WC)

Workers’ Compensation is a statutory policy that covers employees for work-related injuries or illnesses.

It is:

  • Required by law in almost every state
  • Governed by each state’s workers’ compensation statute
  • Purchased through either a private insurer or a state fund

In monopolistic states like Ohio Bureau of Workers’ Compensation, coverage must be purchased through the state fund.

Workers’ Compensation is designed to provide benefits regardless of fault. In exchange, employees generally give up the right to sue the employer. This is called the “exclusive remedy” doctrine.

Stop Gap Coverage

Stop Gap exists because of what Workers’ Compensation doesn’t include in certain states.

In monopolistic states such as:

  • Ohio
  • North Dakota
  • Washington
  • Wyoming

The state fund provides statutory Workers’ Compensation benefits only — and does not include Stop Gap/Employers Liability coverage.

That missing piece is the “gap.”

Stop Gap coverage fills that gap by adding Stop Gap/Employers Liability protection to another policy, typically a Commercial General Liability (CGL) policy.

It is called “Stop Gap” because it literally stops the gap created by monopolistic state fund WC policies.

  1. What Each Coverage Actually Covers

Workers’ Compensation Policy

A standard Workers’ Compensation policy (in non-monopolistic states) has two parts:

Part One – Workers’ Compensation

Covers:

  • Medical expenses
  • Lost wages / indemnity
  • Rehabilitation
  • Death benefits
  • All benefits required by state law

There is no policy limit in the traditional sense — benefits are governed by statute.

Part Two – Employers Liability (in non-monopolistic states)

Covers lawsuits that fall outside the exclusive remedy provision, including:

  • Third party-over actions
  • Loss of consortium claims by family members
  • Dual capacity claims

This section is subject to policy limits (commonly $1M / $1M / $1M).

Stop Gap Coverage

Stop Gap provides Employers Liability only.

It:

  • Does NOT provide statutory Workers’ Compensation benefits
  • Does NOT replace Workers’ Compensation
  • Is typically added by endorsement to a CGL policy
  • Protects against employee injury-related lawsuits outside the WC statute

In monopolistic states like Ohio, Stop Gap is often the only way to obtain Employers Liability protection.

  1. When You Use Each

Workers’ Compensation

You need Workers’ Compensation in every state where you have employees.

Coverage is obtained through:

  • A private insurer (most states), or
  • A monopolistic state fund (Ohio, North Dakota, Washington, Wyoming)

If you operate in Ohio, you must obtain coverage through the Ohio Bureau of Workers’ Compensation.

Stop Gap

Stop Gap is needed only when:

  • You have employees in a monopolistic state, AND
  • The state fund WC policy does not include Employers Liability

If you operate only in non-monopolistic states, your Workers’ Compensation policy already includes Employers Liability — and Stop Gap is generally unnecessary.

  1. Key Practical Differences
Topic Workers’ Compensation Stop Gap
Policy Type Statutory WC (primary) Liability (gap filler)
Who Issues It WC carrier or state fund GL carrier (endorsement) or separate policy
Covers Statutory Benefits? Yes No
Employers Liability Included? Yes (in standard WC states) Yes – that’s all it is
Mandatory by Law? Generally yes Not usually mandated, but strongly recommended in monopolistic states
  1. A Real-World Example

Let’s say you have employees in Ohio.

  1. You must purchase Workers’ Compensation through the Ohio BWC.
  2. That policy covers only statutory benefits.
  3. If an employee files a lawsuit outside the WC statute (such as a loss of consortium claim), you will not have Employers Liability coverage unless Stop Gap was added to your policy.

That is where businesses can find themselves exposed.

Where EPLI Fits In

It’s also important not to confuse Stop Gap with EPLI (Employment Practices Liability Insurance).

EPLI covers:

  • Wrongful termination
  • Discrimination
  • Harassment
  • Retaliation
  • Failure to promote

EPLI does not cover bodily injury claims. Stop Gap does not cover employment practice allegations. They address entirely different exposures.

Both may be necessary depending on your operations and workforce.

How We Help at Haughn Insurance

At Haughn Insurance, we work closely with business owners to:

  • Review multi-state operations for Workers’ Compensation compliance
  • Identify gaps created by monopolistic state funds
  • Coordinate Stop Gap coverage properly with your CGL
  • Evaluate Employers Liability limits
  • Discuss EPLI exposures in today’s employment environment
  • Provide clear, proactive guidance — not just policies

We don’t believe in simply checking a box. We believe in making sure your coverage responds when it needs to.

If you have employees in Ohio or operate across state lines, we would be happy to review your current structure and confirm there are no hidden gaps.

Because when it comes to employee injury and employment claims, clarity matters — and coverage gaps can be costly.

If you would like a coverage review or have questions about your Workers’ Compensation or Stop Gap structure, our team at Haughn Insurance in Dublin, Ohio is here to help.

 

Thanks!