13.4 Other States, USL&H, and Federal Acts

Item 3.A vs Item 3.C

The Information Page controls where the policy responds:

• Item 3.A — Workers Compensation Insurance: lists the states whose statutory benefits the insurer will pay under Part One. These are the states where the employer has known operations.
• Item 3.C — Other States Insurance: lists states where the employer might begin operations during the term. If the employer expands into a 3.C state, Part One coverage applies there automatically, provided the employer reports the new payroll to the insurer (usually within a short window).

Exam Key: A state must be in 3.A or 3.C to be covered. A state listed in neither has no coverage — a serious gap if the employer sends workers there.

Monopolistic State Funds and Stop Gap

A few states operate monopolistic funds — the employer must buy comp from the state, not a private insurer. The classic group is North Dakota, Ohio, Washington, and Wyoming (Puerto Rico and the U.S. Virgin Islands also operate monopolistic systems).

• A monopolistic state cannot be listed in Item 3.A or 3.C of the standard policy.
• Because the state fund provides only the statutory benefits (Part One equivalent) and no employers liability, the private policy adds a Stop Gap endorsement to supply the Part Two / employers-liability protection the state fund omits.

Trap: Stop Gap fills the employers liability hole in monopolistic states; it does not provide the statutory benefits, which still come from the state fund.

USL&H: Longshore and Harbor Workers

The Longshore and Harbor Workers Compensation Act (USL&H) is a federal no-fault comp system for maritime workers — longshoremen, ship repairers, harbor construction workers — injured on navigable waters or the adjoining piers, docks, and terminals used in loading/unloading.

• It is added to the policy by the USL&H Coverage Endorsement, WC 00 01 06 A, naming the act in the schedule.
• USL&H benefits are generally higher than most state acts, so it carries its own rates.
• The status (type of worker) and situs (location) tests both must be met for USL&H to apply.

Jones Act vs USL&H

The Jones Act (Merchant Marine Act) covers seamen — masters and crew members of a vessel in navigation. Crucial distinctions from USL&H:

Trap: A seaman is excluded from USL&H and recovers under the fault-based Jones Act. Misassigning a crew member to USL&H is a classic exam wrong answer.

Other Federal Acts

• FELA (Federal Employers Liability Act): covers interstate railroad workers. Like the Jones Act, it is fault-based — the worker must prove employer negligence, but the railroad's defenses are limited.
• Federal Black Lung Benefits Act: provides benefits to coal miners disabled by pneumoconiosis.
• Defense Base Act: extends USL&H-type benefits to civilian employees working on U.S. military bases abroad and under certain public-works contracts overseas.
• Federal Employees Compensation Act (FECA): covers civilian federal employees through the U.S. government, outside the private policy.

Extraterritorial Coverage and Reciprocity

When a worker is hired in one state but injured in another, extraterritorial provisions decide which state's act applies. Most states extend their own benefits to their workers temporarily in another state, and many honor reciprocity agreements so an out-of-state employer's home coverage is recognized. Problems arise with permanent out-of-state operations: the employer must list that state in Item 3.A, or rely on Other States Insurance in 3.C and report payroll.

Exam Key: Other States Insurance (3.C) is a safety net for unexpected expansion. It does not apply to a state the employer already had operations in at inception, nor to monopolistic-fund states. Known operations belong in 3.A from day one; failing to list a known state leaves a true coverage gap that 3.C will not cure.