Ohio Stop Gap Insurance: Must-Have Or Not?

Stop gap insurance is not mandatory in Ohio. However, it is an important form of coverage for business owners in the state, as it protects them from potential lawsuits arising from work-related injuries or illnesses. In Ohio, workers' compensation insurance is provided through a state fund, and does not include employer's liability coverage. This creates a gap in coverage, which stop gap insurance fills.

Who needs stop gap insurance in Ohio?

In Ohio, stop gap insurance is designed to protect small business owners from lawsuits resulting from workplace injuries or illnesses. It is particularly relevant in monopolistic states like Ohio, where workers' compensation insurance is provided through a state fund and does not include employer's liability coverage. This means that, in the event of a workplace injury or illness, an employee could sue their employer, and the employer would have to pay legal costs out of pocket. Stop gap insurance fills this gap in coverage.

While stop gap insurance is not mandatory, it is an important coverage for business owners in Ohio, who may face significant financial risk without it.

In terms of gap insurance, this is a different type of insurance that covers the difference between how much your insurance will pay out and the remaining balance on your auto loan, in the event that your vehicle is stolen or totaled. Gap insurance is not required by Ohio law, but it may be a good idea if you are worried your insurance won't cover your losses in this scenario, or if you would struggle to pay the gap yourself.

Is stop gap insurance mandatory in Ohio?

Stop gap insurance is not mandatory in Ohio. However, it is an important form of coverage for business owners in the state. This type of insurance helps protect business owners from the financial risks associated with lawsuits filed by employees or contractors due to work-related injuries or illnesses. While it is not required by law, business owners may find it valuable for added peace of mind and protection.

Stop gap insurance, also known as stop gap liability insurance, is a form of insurance that covers occupational accidents and diseases that are not insured by workers' compensation. It is often required by state law or by clients who hire independent contractors or temporary employees. This type of insurance is particularly relevant in Ohio, as private insurers are not permitted to provide workers' compensation insurance in the state. Instead, employers' liability coverage is provided through an endorsement linked to a general liability policy, known as stop gap coverage.

In Ohio, employers' liability coverage is not included in workers' compensation insurance. This creates a gap in coverage for employers, leaving them vulnerable to lawsuits in the event of work-related injuries or illnesses. Stop gap insurance fills this gap by providing liability coverage for employers. It is designed to offer protection to employers who are not required to carry workers' compensation insurance or who operate in monopolistic states like Ohio, where workers' compensation is provided through a state fund.

Considerations for Business Owners

When considering stop gap liability insurance, business owners should carefully review the extent of protection provided, the cost of the policy, and any exclusions or restrictions. Consulting with an experienced insurance agent can help business owners determine the optimum coverage for their specific needs. Additionally, understanding the specifics of the policy is crucial, as stop gap coverage is not a standardized policy and can vary between insurers.

What does stop gap insurance cover?

Stop gap insurance is an endorsement that business owners can purchase to protect themselves from lawsuits filed by employees (or their families) due to workplace injuries or illnesses. It is designed to fill the gap in coverage in a business owner's workers' compensation insurance policy.

In most states, workers' compensation insurance policies include employer's liability coverage. This protects employers from lawsuits arising from work-related injuries or illnesses. However, in four monopolistic states (North Dakota, Ohio, Washington, and Wyoming), employers are required to purchase workers' compensation coverage from a state fund, which does not include employer's liability insurance. This creates a gap in coverage, leaving employers vulnerable to lawsuits.

Stop gap insurance is designed to fill this gap by providing liability coverage for employers in monopolistic states. It covers potential suits such as third-party suits, intentional endangerment, public tort claims, dual capacity claims, and health and injury claims not covered by the workers' compensation program. Additionally, it can cover defence costs, including attorneys' fees and court costs, even if the lawsuit is dismissed.

It is important to note that stop gap insurance is not a substitute for workers' compensation coverage. It is specifically intended to address the gap in employer liability protection in monopolistic states. The coverage provided by stop gap insurance can vary, and employers should carefully review the specifics of the policy to ensure they are getting the needed protection.

How to buy stop gap insurance in Ohio?

In Ohio, gap insurance is not mandatory. However, it is a good idea to purchase it in certain situations. Gap insurance, or guaranteed auto protection insurance, covers the difference between how much your insurance company pays on a claim and the remaining balance on your auto loan if your car is stolen or totaled.

You should consider buying gap insurance in Ohio if any of the following apply to you:

• You have a new loan term with a long payoff period (60 months or longer).
• You are leasing a vehicle and the lender requires gap insurance.
• You put down a small down payment (less than 20%) on a large car loan.
• You have purchased a luxury vehicle or a vehicle that tends to depreciate quickly.
• You have rolled over negative equity from a previous car loan into a new loan.
• You have put on a lot of miles, which can accelerate vehicle depreciation.

When buying a new vehicle, the dealer may offer gap insurance, but it is not recommended to purchase it from them. Dealerships generally charge around $600 or more for gap insurance, whereas an independent insurance company will charge a fraction of that price. Instead, you can purchase gap insurance from most car insurers or add it to your existing policy.

To find the best gap insurance in Ohio for your needs, it is recommended to look at the rates offered by different insurance companies.

What is the cost of stop gap insurance?

Stop gap insurance is an endorsement that can be added to a business's general liability insurance policy. It is not required by law, but it is an important coverage for business owners in monopolistic states, including Ohio. Monopolistic states are those that require businesses to purchase workers' compensation insurance from a state fund, which does not include employer's liability insurance. This leaves business owners vulnerable to lawsuits from employees or their families in the event of a workplace injury or illness. Stop gap insurance fills this gap in coverage and can be purchased from private insurers.

The cost of stop gap insurance is not standardized and will vary depending on the insurer. The premium charge will depend on the individual insurer's underwriting rules and procedures. However, the National Council on Compensation Insurance (NCCI) offers guidelines for rating a stop gap exposure. Basic limits of liability recommended by the NCCI are $100,000 per accident for bodily injury by accident, $100,000 per employee for bodily injury by disease, and a $500,000 policy limit for bodily injury by disease. Higher limits of liability are permitted. The premium is based on the WC classifications and rates in the NCCI workers' comp manual. The initial premium is estimated, with the final premium subject to an audit of the employer's actual exposures.

It is important to note that stop gap coverage is not a substitute for workers' compensation coverage. It is specifically designed to provide liability insurance for employers who may be sued by employees for injuries sustained in the course of their employment. While workers' compensation insurance provides benefits to injured employees, it also requires them to give up their right to sue their employer. However, there are instances when an employer can still be sued, and this is where stop gap coverage comes into play.

By purchasing stop gap coverage, business owners in monopolistic states can ensure they have the necessary protection against costly lawsuits. The exact cost will depend on the specific insurer and the level of coverage required, but it is an important investment to protect their business.

Frequently asked questions