13.4 Other States, USL&H, and Federal Acts
Key Takeaways
- Item 3.A lists primary states; Item 3.C Other States Insurance covers states the employer expands into during the term.
- Monopolistic states (ND, OH, WA, WY) must be insured by the state fund and require Stop-Gap coverage for employers liability.
- USL&H is federal no-fault coverage for harbor/shipyard workers; the Jones Act gives seamen a negligence suit against the employer.
- FELA covers railroad workers on a fault basis, FECA covers civilian federal employees, and Black Lung covers coal miners.
Extending Coverage Beyond the Home State
Part One only covers the states specifically listed in Item 3.A of the Information Page. If an employer expands into a state that is not listed, there is a serious coverage gap. The Other States Insurance provision in Item 3.C solves this.
- States listed in Item 3.A are the primary workers comp states.
- States listed in Item 3.C are Other States where coverage springs into effect if the employer begins operations there during the policy period.
- A few monopolistic state funds (North Dakota, Ohio, Washington, Wyoming) cannot be insured by a private carrier and cannot be listed in 3.A or 3.C; employers must buy coverage from the state fund.
The Monopolistic-State Trap and Stop-Gap
Because the standard policy excludes the monopolistic states, an employer with workers there has no employers liability (Part Two) protection from those state funds, which sell only the statutory benefit. The fix is Stop-Gap (Employers Liability) coverage, added by endorsement to a private policy (often the CGL or the WC policy) to restore Part-Two-type protection in monopolistic states.
Trap: Listing a monopolistic state in Item 3.C does nothing - private carriers cannot write it. The producer must arrange state-fund coverage plus stop-gap.
USL&H and the Federal Maritime Acts
Maritime and federal workers fall outside state acts and require coverage triggered by endorsement:
| Act / coverage | Who it covers | How it attaches |
|---|---|---|
| USL&H (Longshore and Harbor Workers') | Dock, pier, harbor, and shipyard workers (not seamen) | USL&H Coverage Endorsement on the WC policy |
| Jones Act | Seamen - crew members of a vessel in navigation | Endorsement; gives seamen a negligence remedy against the employer |
| FELA | Interstate railroad employees | Fault-based federal statute, not no-fault |
| Federal Black Lung | Coal miners | Federal benefit program, added by endorsement |
| FECA | Civilian federal government employees | Administered by the U.S. government, not private insurers |
The Land/Water Borderline
The single most common exam confusion is USL&H vs. Jones Act:
- USL&H covers workers on or adjacent to navigable waters - longshoremen, harbor workers, shipbuilders, ship-repairers - who are not crew members. It is a federal no-fault workers comp system.
- The Jones Act covers seamen (vessel crew). It is not no-fault; it gives the seaman the right to sue the employer for negligence.
Rule of thumb: if the worker is part of a vessel's crew, think Jones Act; if the worker loads, repairs, or builds ships from the dock or shipyard, think USL&H.
A shipyard worker who repairs vessels at a harbor but is not a member of any vessel's crew is injured. Which coverage applies?
An employer based in a listed state opens a new branch in a monopolistic state fund jurisdiction. What does the producer need to arrange?
Extending Coverage Beyond the Home State
A workers compensation policy provides statutory benefits only for the states listed in Item 3.A of the information page. The Other States Insurance provision (Item 3.C) extends coverage to employees who work in additional listed states or who unexpectedly cross into a state not listed at policy inception, protecting an employer whose operations expand. An employer that knows it will operate in a particular state should list that state in 3.A; relying on 3.C for known exposures is risky, and the exam tests the difference between scheduled states and other-states coverage.
The Monopolistic-State Trap and Stop-Gap Coverage
A few states operate monopolistic state funds, where workers compensation must be purchased from the state, not from a private insurer, and a standard policy cannot provide Part One coverage there. Critically, monopolistic-fund policies often do not include employers liability (Part Two), leaving a gap. Employers operating in those states buy Stop-Gap employers liability coverage, typically endorsed onto a CGL, to fill the missing Part Two exposure. A scenario describing an employer in a monopolistic-fund state worried about an employee lawsuit is testing the need for stop-gap coverage.
USL&H and the Federal Maritime Acts
The Longshore and Harbor Workers Compensation Act (USL&H) is a federal workers compensation system covering maritime workers, such as longshoremen and harbor workers, who are injured on the navigable waters of the United States or adjoining piers, docks, and terminals, but who are not crew members of a vessel. Because state workers compensation does not reach these workers, an employer with such exposure must add USL&H coverage by endorsement.
The Jones Act, by contrast, covers seamen and crew members of vessels, giving them a negligence remedy against the employer rather than no-fault benefits, often addressed through a Maritime Coverage endorsement.
The Land/Water Borderline
The exam frequently tests the jurisdictional boundary among state workers compensation, USL&H, and the Jones Act, because the same worker may fall under different systems depending on location and duties. A dockworker loading a ship from the pier is likely under USL&H; a sailor working aboard the vessel in navigation is a seaman under the Jones Act; a clerk in the shipping company's land office is under state workers compensation. The Defense Base Act, the Federal Employers Liability Act (FELA) for railroad workers, and the Federal Employees Compensation Act round out the federal systems.
Matching the worker's location and role to the correct act is the recurring skill.
Extraterritorial and Reciprocity Issues
When an employee normally working in the home state is temporarily injured in another state, extraterritorial provisions and reciprocity agreements between states determine which state's benefits apply, and the other-states coverage ensures the insurer responds.
A worker hired in one state but injured in another may have a choice of which state's benefits to claim, and the answer depends on the states listed in the policy and their statutes. The exam tests recognition that listing the correct states in Item 3.A, and relying on other-states coverage only for unexpected exposures, prevents gaps when operations cross state lines.