Stop-Gap Insurance in Washington State
Employers Liability Coverage, Explained Clearly (and Correctly)
What Is Stop-Gap Insurance in Washington?
Short answer:
In Washington State, stop-gap insurance is employers liability insurance. It protects employers from lawsuits related to employee injuries that are not covered by workers’ compensation.
Longer answer:
Workers’ comp pays benefits to injured employees. Stop-gap coverage protects the employer when a claim steps outside that system and turns into a lawsuit.
Different name. Same job. Very different consequences if it’s missing.
Think of workers’ comp as the fence.
Stop-gap is what keeps things contained when someone finds a way around it.
Is Stop-Gap Insurance the Same as Employers Liability?
Yes.
In Washington, stop-gap insurance and employers liability insurance refer to the same coverage.
The difference is regional language:
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Most states say employers liability
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Washington commonly says stop-gap
Why Washington Employers Need Stop-Gap Coverage
Washington is not like most states.
Because workers’ compensation is administered through a monopolistic system (Washington Department of Labor & Industries (L&I)or approved self-insurance), employers liability coverage is not automatically included the way it often is elsewhere.
That creates exposure when:
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An injured employee alleges employer negligence
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A spouse or family member sues for loss of consortium
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A third party seeks contribution or indemnification
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An employee opts out of workers’ comp and files a civil lawsuit
When that happens, workers’ comp steps aside — and stop-gap coverage is what stands between the claim and your balance sheet.
2025 Legal Alert: Recent Washington Supreme Court rulings (like Cockrum v. Weyerhaeuser) have made it easier for employees to sue outside of the workers' comp system for certain diseases. This makes "Stop-Gap" coverage more critical than ever, as the "immunity" employers once expected from L&I is being narrowed by the courts.
No stop-gap? You’re on your own.
That’s not conservative. That’s exposed.
Does Workers’ Compensation Include Employers Liability in Washington?
No.
Washington workers’ compensation does not include employers liability coverage by default.
Workers’ comp:
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Pays medical bills
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Replaces lost wages
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Protects the employee
It does not protect the employer from lawsuits.
That protection comes from stop-gap insurance.
Stop-Gap Insurance vs. Workers’ Compensation (Plain English)
Workers’ Compensation
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Pays medical bills and lost wages for injured employees
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Administered by L&I or approved self-insurance
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Designed to protect the employee
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Does not provide liability coverage for the employer
Stop-Gap Insurance (Employers Liability)
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Pays legal defense costs, settlements, and judgments
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Added through a commercial insurance policy
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Designed to protect the employer
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Covers lawsuits and legal claims related to employee injuries
They’re designed to work together.
One handles injuries. The other handles blame.
What Does Stop-Gap Insurance Cover?
Stop-gap insurance may respond to:
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Employee injury lawsuits outside the workers’ comp system
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Claims alleging unsafe working conditions
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Third-party over-action claims
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Legal defense costs, even if allegations are groundless
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Court awards and settlements, up to policy limits
Coverage is usually provided:
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As an endorsement to a General Liability policy, or
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Through a standalone Employers Liability / Stop-Gap policy
Structure matters. Limits matter.
This is not a “close enough” kind of coverage.
What Stop-Gap Insurance Does Not Cover
Stop-gap coverage has edges. Knowing where they are matters.
It generally does not cover:
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Intentional or fraudulent acts
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OSHA fines or penalties
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Standard workers’ compensation benefits
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Claims that fall entirely within Washington Department of Labor & Industries (L&I)’s exclusive remedy
If someone tells you stop-gap “covers everything,” they’re either wrong or selling too hard.
Is Stop-Gap Insurance Required in Washington State?
Stop-gap insurance is not mandated by statute, but for most Washington employers, it is functionally necessary.
If you have employees, you have exposure.
If you have exposure, you need coverage that survives a lawsuit.
Plenty of businesses find this out only after the fence is tested.
Which Washington Businesses Need Stop-Gap Insurance?
If you employ workers in Washington, assume you need stop-gap coverage — especially if you are:
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A contractor or trades business
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A manufacturer or warehouse operation
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A professional services firm with employees
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A nonprofit or social service organization
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A growing business hiring its first employee
Smaller teams aren’t safer. They’re often less insulated.
The wolves don’t care how big your payroll is.
How Much Stop-Gap Insurance Do Washington Employers Carry?
Common limits include:
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$1,000,000 per occurrence
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$1,000,000 aggregate
Higher limits may be appropriate depending on:
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Payroll size
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Industry risk
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Contractual requirements
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Claims history
Minimum limits satisfy paperwork.
Adequate limits protect businesses.
Those are not the same thing.
Common Stop-Gap Insurance Mistakes We See
These come up regularly — usually after something’s already gone wrong.
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Assuming workers’ comp already includes employers liability
It doesn’t. That assumption is expensive.
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Buying general liability without a stop-gap endorsement
Close does not count.
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Using out-of-state policy forms for Washington exposure
Washington plays by its own rules.
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Treating stop-gap as optional for small businesses
Lawsuits don’t scale down politely.
Strong coverage plans ahead. The pack survives by anticipating pressure.
Stop Gap FAQs
Stop-Gap Insurance in Washington State: What Every Business Needs to Know
The Short Answer: Because Washington is a "monopolistic" state, your standard L&I workers' comp policy does not protect you from employee lawsuits. Stop-Gap Insurance is a specialized liability coverage that "plugs the hole" in your protection, ensuring your Lynnwood business isn't bankrupted by a workplace injury lawsuit.
Frequently Asked Questions about Stop-Gap Insurance1. What is Stop-Gap Insurance?
Stop-Gap Insurance (formally known as Employers Liability Insurance) is a policy that protects your business if an injured employee or their family sues you for damages that fall outside the scope of traditional workers' compensation. In Washington, this is typically added as an endorsement to your General Liability policy.
2. Why do I need Stop-Gap if I already pay for L&I Workers' Comp?
In Washington State, workers' compensation is "monopolistic," meaning it is managed solely by the Department of Labor & Industries (L&I). While L&I pays for medical bills and lost wages, it does not provide liability protection for the employer. If an employee alleges that your "gross negligence" caused their injury, L&I will not defend you in court. Stop-Gap is your "Alpha Wolf" that steps in to handle legal defense and settlements.
3. Is Stop-Gap Insurance required by law in Washington?
While L&I Workers' Comp is legally required for almost all employers, Stop-Gap is technically optional. However, most commercial contracts (especially for contractors in Lynnwood and Everett) require you to carry it. Without it, a single lawsuit could force you to pay for legal fees and damages out-of-pocket, which is why we consider it "essential" rather than optional.
4. What specific claims does Stop-Gap cover?
Stop-Gap insurance covers the "gaps" in the no-fault system, including:
Third-Party Over-Action: When an injured employee sues a third party (like an equipment manufacturer), and that party sues you for contribution.
Loss of Consortium: Lawsuits filed by the spouse or family members of an injured worker.
Negligent Supervision: Claims that your failure to properly train or supervise led to the injury.
Dual Capacity: If you are sued in a capacity other than just "the employer" (e.g., as the manufacturer of the tool that caused the injury).
5. How do I get Stop-Gap Insurance for my Lynnwood business?
You cannot buy Stop-Gap from the state (L&I). You must purchase it through a private insurance agency like Hood Insurance Agency. We typically include it as an endorsement on your General Liability or Business Owners Policy (BOP) to ensure your "pack" has seamless, 360-degree protection.
The "Pack" Analogy: Why Both Matter
Think of your business protection like a wolf pack:
Workers' Comp (L&I) is the watchful perimeter. It handles the predictable, everyday injuries that happen in the wild.
Stop-Gap Insurance is the Alpha Wolf. It only steps in when a threat is aggressive enough to bypass the perimeter and target the heart of your business with a lawsuit.
Stop-Gap Insurance from a Washington-Based Agency
We work with Washington employers every day and understand:
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L&I versus self-insurance structures
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How stop-gap actually attaches to WA policies
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Where national carriers and online platforms routinely miss the mark
We don’t sell checkbox insurance.
We build coverage meant to hold when something pushes back.
If you employ people in Washington — or plan to — this is not a corner to cut.
Let’s make sure your coverage stands when it’s tested.
That’s how businesses last. The pack plans ahead.