Do I need workers’ compensation in a monopolistic state?

Yes, and you cannot buy it from NEXO or any other private broker. A monopolistic state is one where workers’ compensation is available only through a state-run fund, so coverage is purchased directly from the state rather than on the private market. Ohio, North Dakota, Washington, and Wyoming operate this way. The obligation is the same as anywhere else; only the purchasing route changes. What NEXO Insurance Services can do is make sure the gap this creates in your private program is closed, which is the part most gym and studio owners miss.

What is a monopolistic state?

In most states, workers’ compensation is bought from private carriers, and a broker like NEXO can place it alongside your liability and property coverage in a single program. In a monopolistic state, the state fund is the only seller. A private broker cannot quote it, cannot place it, and cannot service it. Owners sometimes read this as meaning they do not need it, which is the opposite of the case.

Which states are monopolistic?

State arrangements do change, and some states operate competitive state funds that sit alongside private carriers rather than replacing them. NEXO confirms the current position for your state rather than relying on a list, and the federal overview at usa.gov is a reasonable starting point for checking.

The gap most owners miss

This is the part worth reading twice. Because the state fund provides statutory benefits only, it typically does not include employers’ liability coverage, the part that responds when an employee sues the business over a work-related injury rather than simply claiming benefits. In a private-market state, employers’ liability is normally bundled into the workers’ compensation policy. In a monopolistic state, it is not, and the business is left exposed unless it is added separately.

The fix is a stop gap endorsement, sometimes called employers’ liability stop gap, added to your general liability policy. NEXO adds this for gyms and studios operating in monopolistic states as a matter of course, because the exposure is easy to overlook and the endorsement is inexpensive relative to what it addresses.

Employee Sues After a Workplace Injury

Scenario: An employed coach in Ohio is injured at the facility, receives state fund benefits, and then brings a suit against the business alleging unsafe conditions.

Coverage to review: State fund benefits address the statutory claim. The suit is an employers’ liability matter, which the state fund generally does not cover. A stop gap endorsement on the general liability policy is what responds. NEXO adds this for clients in monopolistic states.

Multi-State Operator

Scenario: A studio group operates locations in Washington and Oregon.

Coverage to review: Washington coverage comes from the state fund; Oregon from the private market. NEXO can place the private-market portion and add stop gap for the monopolistic location, so the program is consistent across both.

What this means practically for your gym

• You still have a workers’ compensation obligation once you have employees, exactly as in any other state.

• You buy it directly from the state fund, not through NEXO or any private broker.

• Your private program should carry a stop gap endorsement to cover employers’ liability.

• If you operate across state lines, your program needs to reflect both routes.

• Instructor classification questions still apply, and misclassification carries the same consequences.

Frequently Asked Questions

Do I need workers’ compensation in a monopolistic state?

Yes. The obligation is the same as in any other state once you have employees. What changes is that you buy it from the state fund rather than from a private carrier, so NEXO Insurance Services cannot place it for you, though NEXO can make sure the resulting gap in your private program is closed.

Which states are monopolistic for workers’ compensation?

Ohio, North Dakota, Washington, and Wyoming. Arrangements can change and some states run competitive funds alongside private carriers, so NEXO confirms the current position for your state rather than relying on a list.

What is a stop gap endorsement and do I need one?

It adds employers’ liability coverage to your general liability policy, covering suits brought by employees over work-related injuries. State funds generally provide statutory benefits only, without employers’ liability, so a business in a monopolistic state is exposed without it. NEXO adds this for clients in those states as standard.

Can NEXO place my workers’ compensation in Ohio or Washington?

No private broker can, because the state fund is the only seller. NEXO can place the rest of your program, add the stop gap endorsement, and make sure the pieces fit together.

What if I operate gyms in more than one state?

Your program needs to reflect both purchasing routes, with state fund coverage in monopolistic locations and private coverage elsewhere, plus stop gap where applicable. NEXO structures multi-state fitness programs so the coverage is consistent across locations.

About NEXO Insurance Services

NEXO Insurance Services is a California-licensed insurance brokerage and managing general agent specializing in coverage for fitness, martial arts, studio, and wellness businesses. NEXO holds California Broker/Agent License OG51267 and California Agency License OE14627, serves over 20,000 fitness professionals across the United States, and has focused exclusively on this sector since 2005.

To review coverage for your business, contact the NEXO team. Insurance availability, coverage, limits, exclusions, and policy terms vary by state, carrier, and individual risk.

This page is general information published by NEXO Insurance Services and is not a policy, a quote, or a guarantee of coverage. Coverage, limits, exclusions, and eligibility are determined by the issued policy and by underwriting, and vary by state and carrier. Confirm how your own policy addresses these situations with a licensed NEXO representative.