13.4 Other States, USL&H, and Federal Acts

Where the Policy Applies: Item 3.A vs. Item 3.C

The Information Page of the standard policy controls geography through two items that candidates constantly confuse:

A worker who travels into a state listed in 3.C is covered without endorsement. But Item 3.C cannot list a monopolistic state, and listing "all states except..." still excludes the four monopolistic states plus the state(s) named.

Monopolistic vs. Competitive States

Most states are competitive — employers buy comp from private insurers (and may self-insure). A handful are monopolistic state-fund states where employers must buy comp from the state fund and cannot buy Part One from a private insurer.

• The four monopolistic states are commonly tested as North Dakota, Ohio, Washington, and Wyoming (Puerto Rico and the U.S. Virgin Islands also operate monopolistic funds).
• In a monopolistic state the private policy cannot provide Part One (statutory) coverage — the employer must use the state fund.
• But the state fund usually does not sell Part Two (employers liability). The employer fills that gap with a Stop Gap endorsement added to a general liability or excess policy to provide employers liability in the monopolistic state.

Federal Acts That Override State Comp

Certain workers are covered by federal laws instead of, or on top of, state comp. Know which act covers whom and how it works:

Key distinction: FELA and the Jones Act are fault-based tort systems (sue and prove negligence). USL&H and FECA are no-fault comp systems. The Jones Act is essentially "FELA for sailors."

USL&H and the Overlap Zone

The Longshore and Harbor Workers' Compensation Act (USL&H) covers maritime employment on or adjacent to navigable U.S. waters — loading/unloading vessels, ship repair, shipbuilding. It is no-fault but pays higher benefits than most state acts.

• USL&H exposure is picked up by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement (WC 00 01 06) on the standard policy.
• The twilight zone describes workers who could fall under either state comp or USL&H; concurrent jurisdiction may allow a claim under either system.
• The Defense Base Act extends USL&H to civilian contractors on overseas U.S. military bases.

Exception trap: do not confuse USL&H (no-fault comp for dockside workers) with the Jones Act (negligence suit for crew members aboard the vessel). The dividing line is whether the worker is a member of the crew of a vessel (Jones Act) or a shoreside maritime worker (USL&H).

Other States Coverage and Monopolistic States

The workers' compensation policy is state-specific: Part One covers only the states listed in item 3.A of the Information Page. Other States Insurance (item 3.C) extends coverage to operations that begin in additional listed states during the policy period — protecting an employer who expands or sends workers into a new state. A state must be listed in 3.C to be covered; an employer doing business in a state shown in neither 3.A nor 3.C has a serious gap. For that reason, producers often list all states except monopolistic and the named states in 3.C.

A handful of monopolistic states require employers to buy workers' compensation from a state fund rather than a private insurer; in those states, employers liability (Part Two) is not automatically included and must be obtained through a Stop Gap endorsement on the CGL or a separate policy.

Federal Compensation Acts and USL&H

Certain workers are covered by federal statutes rather than (or in addition to) state law, and these are tested:

• The U.S. Longshore and Harbor Workers' Compensation Act (USL&H) covers maritime workers (longshoremen, harbor/ship-repair workers) injured on navigable waters and adjoining areas — but not crew members of a vessel. Coverage is added by the USL&H endorsement to the workers' compensation policy.
• The Jones Act (Merchant Marine Act) gives seamen/crew members the right to sue their employer for negligence — a tort remedy, not no-fault benefits — and is insured under Maritime/Jones Act coverage added to employers liability.
• The Federal Employers Liability Act (FELA) governs interstate railroad workers, again on a fault/negligence basis.
• The Federal Black Lung Act, the Defense Base Act, and the Federal Employees' Compensation Act (FECA) cover specific worker groups.

The key exam distinctions: state acts, USL&H, and Black Lung are no-fault benefit systems, while the Jones Act and FELA are negligence (fault-based) remedies allowing the worker to sue — and USL&H/Jones Act coverage must be added by endorsement because the standard policy does not include them.