This type of insurance provides temporary protection for businesses when there’s a lapse in their workers’ compensation coverage. For instance, a policy might expire before a renewal is finalized, creating a potential gap in coverage. This specialized insurance is designed to fill that gap, ensuring employees remain protected in case of work-related injuries or illnesses during that period.
Maintaining continuous coverage for workplace incidents is crucial for legal compliance and employee well-being. Without this interim protection, organizations could face significant financial liabilities for medical expenses, lost wages, and potential legal costs. Historically, the development of this type of insurance reflects a growing awareness of the importance of uninterrupted coverage and the potential risks associated with even temporary lapses. It provides a crucial safety net for both employers and employees during transitional periods in coverage.