Workers’ compensation and employers liability (also called stop gap coverage) protect your business in different ways—just like wolves in a pack have different roles in guarding against threats. Workers’ comp covers medical bills and lost wages after a workplace injury. Employers liability steps in when an injured employee or their family sues for damages not covered by workers’ comp. Both coverages are essential to keep your business—and your pack—safe. Learn the key differences and make sure you’re fully protected.
Employers Liability vs. Workers’ Compensation – What’s the Difference?
Jon Hood
What Is Workers’ Compensation Insurance?
Workers’ compensation insurance is the first layer of protection for your team. It covers:
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Medical expenses for work-related injuries or illnesses.
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Lost wages during recovery.
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Rehabilitation services to return to work.
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Death benefits for surviving family members.
Workers’ comp is a no-fault system, meaning the employee doesn’t need to prove negligence to receive benefits. In exchange, they generally can’t sue the employer for the injury.
Most states require workers’ compensation coverage, either from a private insurer or a state-run fund.
What Is Employers Liability Insurance?
Employers liability insurance—also called Stop Gap Coverage in some states—protects your business from lawsuits filed by employees or their families for work-related injuries not covered by workers’ comp benefits.
Examples of covered claims include:
Alleged negligence in maintaining a safe workplace.
Failure to train or supervise properly.
Loss of consortium claims by a spouse or family member.
Third-party over-action lawsuits (another party sues you after compensating your employee).
In most states, employers liability is included in a standard workers’ compensation policy.
However, in Washington, North Dakota, Ohio, and Wyoming, workers’ comp is only available through a state fund—and that policy does not include employers liability. Businesses in these states must purchase Stop Gap Coverage separately, often as an endorsement to their general liability policy.
Why Do You Need Both Coverages?
Without workers’ compensation, you’re breaking the law and risking heavy fines.
Without employers liability insurance, your business could face expensive legal defense costs, settlements, and judgments if an employee lawsuit falls outside the workers’ comp system.
Quick comparison:
Workers’ Compensation Insurance – Pays for medical bills and lost wages for injured employees.
Employers Liability Insurance (Stop Gap) – Pays for lawsuits related to employee injuries.
Wolf-Themed Analogy for Protection
Think of your business as a wolf pack:
Workers’ compensation is the watchful perimeter—it guards against the everyday risks you can see coming.
Employers liability is the alpha wolf—stepping in when a threat bypasses the first line of defense.
Both are essential for keeping your “pack” safe.
Bottom Line
Employers liability and workers’ compensation work together to protect your business from financial harm when employees get hurt. If you’re in a state-fund-only state, make sure you have Stop Gap Coverage in place to close the protection gap.
Need help reviewing your coverage? Hood Insurance Agency can help ensure your business—and your pack—is protected from every angle.
Contact Hood Insurance Agency Today!
While workers’ compensation insurance and employers’ liability insurance are often associated, they serve different roles in protecting businesses and employees. Workers’ compensation ensures injured employees receive medical and wage benefits, while employers’ liability protects businesses from lawsuits related to workplace injuries. In Washington State, it’s important to remember that workers’ compensation must be obtained through L&I, while employers’ liability insurance must be purchased separately through an insurance agent. Ensuring that your business has comprehensive coverage will help safeguard both your employees and financial interests. If you’re looking for the best workers’ compensation and employers’ liability insurance in Lynnwood, WA, consult with our experienced team to ensure you have the right coverage tailored to your needs. Contact us today to learn more about how we can help protect your business!