Workers’ Compensation Monopolistic States: What They Are and How to Verify COIs

Monopolistic states are jurisdictions where employers are legally required to purchase workers’ compensation insurance exclusively through a state-run fund. Four U.S. states operate this way: Ohio, Washington, Wyoming, and North Dakota. For risk managers verifying vendor Certificates of Insurance (COI), operating in monopolistic states creates unique compliance challenges that standard COI review processes often miss.

Key Takeaways

• Four states are monopolistic for workers’ compensation: Ohio, Washington, Wyoming, and North Dakota. Employers operating in these states must buy workers’ compensation (WC) coverage directly from the state fund.
• Monopolistic state-fund policies do not include employer’s liability coverage, so “Part B” of a standard WC policy is missing.
• Stop Gap Coverage is added to a general liability policy (issued by a private carrier) that provides the employer’s liability protection not included by the state fund.
• Monopolistic-state COIs look different. State funds issue their own certificates, which don’t follow the ACORD 25 format most verification workflows expect.
• Multi-state vendors require state-fund coverage where monopolistic states mandate it, private WC elsewhere, plus Stop Gap on the GL policy.
• Public sector entities face heightened exposure because statutory compliance and audit defensibility depend on verifying coverage that doesn’t fit standard templates.

What Are the Four Monopolistic Workers’ Comp States?

The four monopolistic states for workers’ compensation are Ohio, Washington, Wyoming, and North Dakota. In each, employers cannot purchase workers’ compensation insurance from a private carrier. Coverage must be obtained directly from the state-administered fund.

Administering Agency	Self-Insurance Permitted?	Stop Gap Required for Employer Liability?
Ohio	Ohio Bureau of Workers’ Compensation (BWC)	Yes (qualified employers)	Yes
Washington	Washington Department of Labor & Industries (L&I)	Yes (qualified employers)	Yes
Wyoming	Wyoming Department of Workforce Services	No	Yes
North Dakota	North Dakota Workforce Safety and Insurance (WSI)	No	Yes

While every other U.S. state operates a competitive market, these four monopolistic states maintain a government-run insurance market that prohibits private competition.

Why Do These Monopolistic States Prohibit Private Workers’ Comp Insurance?

Each of the four monopolistic states adopted state-fund-only systems to guarantee a minimum level of workers’ compensation protection for every covered employee within their borders. By centralizing coverage through a single public administrator, these monopolistic states can control premium rates, claim adjudication, and benefit standards, removing the variability that comes with multiple private carriers.

For public sector risk managers, this ties compliance directly to state law. When a vendor operates in Ohio, Washington, Wyoming, or North Dakota, risk managers must confirm whether the employer is enrolled with the state fund and current on premiums. Public entities must document this carefully to satisfy audit and transparency requirements.

Does State-Fund Insurance Include Employer’s Liability?

No. A standard workers’ compensation policy in a competitive-market state contains two parts:

• Part A Workers’ Compensation: Pays statutory benefits to injured employees (medical, wage replacement, disability).
• Part B Employer’s Liability (EL): Protects the employer against lawsuits arising from workplace injuries not covered by statutory benefits alone.

Monopolistic state funds only provide Part A. Employer’s liability is excluded.

To fill that gap, employers add an endorsement attached to their commercial general liability (CGL) called a Stop Gap Coverage policy, issued by a private carrier. Stop Gap restores the employer’s liability protection that the state fund omits.

This is a critical distinction for anyone managing vendors across monopolistic states; if you see only a state-fund WC certificate, you have not verified employer’s liability coverage. A claim from a subcontractor’s employee that alleges employer negligence could leave both the vendor and your organization exposed.

How Do I Verify a COI From a Monopolistic State?

Verifying a monopolistic-state COI requires several coordinated checks. Here’s the verification checklist Evident applies:

1. Confirm the State-Fund Certificate: The vendor should provide a certificate issued by the relevant agency. These certificates confirm the employer is enrolled and current.
2. Verify Stop Gap on the GL policy: Pull the vendor’s CGL COI and confirm the Stop Gap endorsement is listed. Limits should meet your contractual requirements.
3. For Self-Insured Employers (Ohio, Washington only): Request the state-issued self-insurance authorization document in lieu of a state-fund certificate.
4. For Multi-State Vendors: Confirm the vendor carries private WC coverage in non-monopolistic states and state-fund coverage where required.
5. Document the Verification: Capture certificate copies, endorsement language, and verification timestamps.

This is where manual COI verification breaks down. State-fund certificates don’t auto-parse against ACORD-trained verification rules, Stop Gap endorsements get missed because they live on a different policy, and multi-state vendors create matrix-style compliance requirements that spreadsheets can’t reliably track.

What If a Vendor Self-Insures in Monopolistic States?

Ohio and Washington allow qualified employers to self-insure their workers’ compensation obligations rather than participating in the state fund. Wyoming and North Dakota do not.

Self-insurance is not informal. Employers must apply, demonstrate financial capacity, and receive state authorization. For COI verification purposes, a self-insured vendor should provide:

• The state-issued self-insurance authorization (in place of a state-fund certificate).
• Proof of any required surety bond or security deposit.
• Stop Gap or equivalent employer’s liability coverage on the GL policy.

Treating a self-insurance authorization as equivalent to a private WC policy is a common verification mistake. The documentation is different, the renewal cycle is different, and the audit defensibility depends on confirming the authorization is active for the current period.

Can a Vendor Mix State-Fund and Private WC Coverage Across States?

Yes, and most multi-state vendors do. A construction subcontractor operating in Ohio and Pennsylvania, for example, will carry state-funded WC in Ohio and a private WC policy covering Pennsylvania operations.

For risk managers verifying these vendors, the workflow is:

• Identify every state where the vendor’s employees perform work for your contract.
• Confirm appropriate WC coverage in each.
• Confirm Stop Gap on the GL policy if any work is performed in a monopolistic state.
• Re-verify on renewal, since vendors expanding into new states often miss the monopolistic-state requirement until a claim surfaces it.

Why Monopolistic-State Verification Matters for Public Sector Risk Programs

Public sector entities face two compounding pressures on vendor compliance:

• Statutory Adherence: Many public entities operate under state procurement codes that require documented proof of vendor insurance, including workers’ compensation, before contract award and throughout performance.
• Audit and Transparency Obligations: Public records requests, internal audits, and oversight bodies expect a defensible verification trail.

For public sector entities, the risk of unverified coverage in monopolistic states can lead to significant financial exposure and documented compliance failures.

Reduce Monopolistic-State Verification Risk With Evident

Workers’ compensation verification is rarely the headline risk in a vendor compliance program, until a claim from a monopolistic state exposes a coverage gap nobody caught.

Evident’s insurance verification platform standardizes COI tracking across every jurisdiction, including the four monopolistic states. The platform automates policy validation against your contractual requirements, flags missing endorsements like Stop Gap, monitors state-fund certificates and self-insurance authorizations for currency, and maintains the documented audit trail public sector entities need.

Ready to see how it works? Schedule a demo or explore pricing.

Frequently Asked Questions

What are the four monopolistic workers’ comp states?

Ohio, Washington, Wyoming, and North Dakota. Employers operating in these states must purchase workers’ compensation insurance directly from the state-administered fund. Private carriers are not permitted to write WC coverage in these jurisdictions.

Why do Ohio, Washington, Wyoming, and North Dakota require state-fund workers’ comp?

Each state adopted a monopolistic structure to guarantee a minimum level of workers’ compensation protection across all covered employees by centralizing coverage through a single public administrator. The system controls premium rates, claim adjudication, and benefit standards through state law rather than competitive market dynamics.

Does a monopolistic-state workers’ comp policy include employer’s liability?

No. Monopolistic state funds only provide Part A coverage, like statutory benefits to injured employees. Employer’s liability (Part B), which protects against lawsuits arising from workplace injuries, is excluded. Employers must add Stop Gap Coverage as an endorsement to their commercial general liability policy to obtain employer’s liability protection.

What does a monopolistic-state workers’ compensation certificate of insurance look like?

It’s issued by the state agency rather than a private insurer, and it does not follow the ACORD 25 format used for most COIs. Verification workflows built only around ACORD templates often miss or misclassify these certificates.

Can a business with operations in multiple states mix state-fund and private WC coverage?

Yes. Multi-state vendors typically carry state-fund coverage in monopolistic states and private WC policies for operations in competitive-market states. The two coexist within the vendor’s overall WC program. Risk managers should confirm appropriate coverage in every state where vendor employees perform work.

How do I verify a COI from a monopolistic state?

Confirm the state-fund certificate (or self-insurance authorization in Ohio or Washington), verify Stop Gap Coverage on the vendor’s general liability policy, confirm coverage in all other states where the vendor operates, and document the verification with certificate copies, endorsement language, and timestamps. Standardizing how your organization handles monopolistic states in your tracking system is the only way to ensure audit-readiness and consistent risk transfer.

What is Stop Gap Coverage?

Stop Gap Coverage is an endorsement attached to a commercial general liability policy, issued by a private carrier, that provides the employer’s liability protection excluded from monopolistic state-fund workers’ compensation policies. It restores the “Part B” coverage that competitive-market WC policies include by default.

Can a vendor self-insure workers’ compensation in a monopolistic state?

Only in Ohio and Washington, and only for qualified employers who apply and receive state authorization. Wyoming and North Dakota do not permit self-insurance.