Other States, USL&H, and Federal Acts

The Three Policy Information-Page Items

The declarations (information page) lists three jurisdictional items the exam tests directly:

• Item 3.A — listed states: states where the insured had operations on the policy effective date. Part One pays full statutory benefits in these states automatically.
• Item 3.C — Other States Insurance: states the insured names for future operations. If the insured begins work in an Item 3.C state, Part One coverage extends there automatically.
• A monopolistic state fund state can never be listed under 3.A or 3.C of the standard policy.

The key trap: if the insured starts operating in a state that is neither listed in 3.A nor 3.C, there is a coverage gap — that is exactly what Other States Insurance is designed to prevent.

Monopolistic vs. Competitive State Funds

States handle the workers comp market in different ways:

The four classic monopolistic states are North Dakota, Ohio, Washington, and Wyoming (sometimes remembered with the territories). Because a private policy cannot write Part One in a monopolistic state, employers there buy a Stop Gap endorsement on another policy to get Employers Liability (Part Two) coverage, which the state fund does not provide.

USL&H — the U.S. Longshore and Harbor Workers Act

Maritime employment falls outside state workers comp. The U.S. Longshore and Harbor Workers' Compensation Act (USL&H) is a federal law covering workers who load, unload, build, or repair vessels on the navigable waters of the U.S. and adjoining piers, docks, and terminals.

• USL&H is added to the workers comp policy by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement.
• Benefits under USL&H are generally higher than state benefits, so it must be specifically endorsed and rated.
• The Outer Continental Shelf Lands Act extends USL&H to offshore oil/gas workers; the Defense Base Act extends it to civilian contractors on overseas military bases.

Trap: a dockworker injured on a pier is a USL&H claim, not an ordinary state claim — the candidate must spot the maritime location.

The Jones Act and Federal Employers Liability

Two more federal regimes appear because they are fault-based, unlike no-fault state WC:

• The Jones Act (Merchant Marine Act): covers seamen — crew members of a vessel in navigation. Unlike USL&H, the Jones Act lets the seaman sue the employer for negligence (it is a tort remedy, not no-fault). Coverage is provided by a Maritime Coverage Endorsement on the WC policy or by a P&I (protection and indemnity) policy.
• FELA — Federal Employers' Liability Act: covers interstate railroad workers. Like the Jones Act, it is negligence-based; the worker sues the railroad. It is not a workers comp benefit system.

Memory hook: seamen = Jones Act; railroad = FELA; dock/harbor = USL&H. The first two are fault suits; USL&H and state WC are no-fault benefit systems.

Worked Scenario: Picking the Right Coverage

A marine contractor employs three groups: office staff in Ohio, a crew member aboard a tugboat, and a dock laborer repairing vessels at the pier.

• Office staff (Ohio): Ohio is monopolistic — buy Part One from the Ohio state fund and add a Stop Gap endorsement elsewhere for Employers Liability.
• Tugboat crew member: a seaman -> Jones Act (negligence/tort), covered via Maritime endorsement, not state WC.
• Dock laborer repairing vessels: maritime location -> USL&H, added by the Longshore endorsement.

This single employer needs a state fund placement, a Stop Gap, a Maritime/Jones Act endorsement, and a USL&H endorsement — illustrating why federal acts are tested as overlapping layers, not alternatives.

Extraterritorial and Reciprocity Rules

Workers routinely cross state lines, so states adopt extraterritorial provisions: an employee based in the home state but temporarily working in another state usually remains covered under the home-state statute. Many states honor reciprocity, recognizing another state's coverage for a visiting employer and not requiring a separate local policy for short assignments.

The interaction with the policy is direct. If the employee's home state is listed in Item 3.A, Part One follows the worker on temporary out-of-state work. But a permanent new operation in an unlisted, non-3.C state still needs Other States Insurance or an endorsement to add that state. The exam tests the line between a temporary assignment (home-state coverage usually follows) and a new permanent location (the state must be added). When two states could both claim jurisdiction, statutes resolve it.

Why Stop Gap Is Necessary in Monopolistic States

In a monopolistic-fund state, the employer must buy Part One statutory coverage from the state fund, and a private insurer cannot write it there. But the state fund generally provides only the statutory benefits — it does not offer Employers Liability (Part Two). That leaves the employer exposed to the very tort suits Part Two normally absorbs: third-party-over actions, consortium claims, and dual-capacity suits.

The solution is the Stop Gap endorsement, attached to another policy the employer already carries — typically the Commercial General Liability policy — to supply Employers Liability coverage in those monopolistic states. Without Stop Gap, an employer in Ohio or Washington could satisfy the statutory mandate yet have no defense when an employee's family sues for loss of consortium. The exam pairs "monopolistic state" with "how does the employer get Employers Liability?" — and the answer is Stop Gap, not the state fund.