13.4 Other States, USL&H, and Federal Acts
Key Takeaways
- Item 3.A lists states where Part One applies from day one; Item 3.C Other States Insurance extends Part One to states named there if the employer begins work in one, but NOT to monopolistic states or states already in 3.A
- Monopolistic states (ND, OH, WA, WY) require coverage from the STATE fund; private WC policies cannot be sold there, so employers liability must be picked up via a Stop Gap endorsement, often on the CGL
- USL&H (Longshore and Harbor Workers' Compensation Act) is a federal NO-FAULT act for maritime workers on navigable waters and adjoining areas; it is added by the USL&H endorsement (WC 00 01 06)
- FELA (railroads) and the Jones Act (seamen) are negligence-based, not no-fault: the worker must prove employer negligence but may then recover pain and suffering
- Other federal acts: FECA (federal civilian employees), DBA (Defense Base Act, contractors overseas), and the Black Lung Benefits Act (coal miners)
The Information Page Controls Territory
Where Part One responds is set by the Information Page, not by where the accident happens.
| Item | Coverage |
|---|---|
| Item 3.A | States where Part One applies from inception — the employer's known operating states |
| Item 3.B | Employers liability (Part Two) limits |
| Item 3.C | Other States Insurance — names states where Part One will respond if the employer later begins operations there |
Trap: Other States coverage in 3.C does not cover states that are monopolistic-fund states, nor any state already listed in 3.A. If an employee is sent to a state in neither 3.A nor 3.C, there may be no coverage there. Best practice is to list "all states except [3.A states and monopolistic states]" in 3.C.
Monopolistic State Funds and Stop Gap
Four monopolistic-fund states require employers to buy workers' comp only from the state fund; private WC policies cannot be sold there. Memorize them:
| State | Note |
|---|---|
| North Dakota (ND) | State fund only |
| Ohio (OH) | State fund only |
| Washington (WA) | State fund only |
| Wyoming (WY) | State fund only |
The state fund provides Part One benefits but not employers liability. To fill that gap, the employer buys Stop Gap Liability coverage, typically added by endorsement to the Commercial General Liability (CGL) policy. (Texas, by contrast, is not monopolistic; it is the one state where private coverage is optional, and non-subscribers lose common-law defenses.)
USL&H and the Maritime/Federal Acts
The type of worker, not the accident location, selects the act. This is one of the most tested tables in the entire P&C exam.
| Act | Covered Workers | No-Fault? | How Added |
|---|---|---|---|
| USL&H Act | Longshore, harbor, ship-repair workers on/adjoining navigable waters | Yes | USL&H endorsement WC 00 01 06 |
| FECA | Federal civilian employees | Yes | Federal program |
| DBA (Defense Base Act) | U.S. contractors on overseas military bases | Yes | Endorsement extending USL&H |
| Black Lung Benefits Act | Coal miners (pneumoconiosis) | Yes | Federal program |
| FELA | Interstate railroad workers | No — prove negligence | Not WC; separate liability |
| Jones Act | Seamen / vessel crew | No — prove negligence | Not WC; separate liability |
FELA and the Jones Act replace no-fault with a negligence lawsuit: the worker must prove employer fault but may then recover pain-and-suffering damages a no-fault statute would never pay. USL&H sits landward of the Jones Act (longshore workers loading on the dock) and seaward of state comp, filling the maritime gap with no-fault benefits typically higher than state scales.
An employer headquartered in Texas has all its states listed in Item 3.A and 'all other states except ND, OH, WA, WY' in Item 3.C. A worker is temporarily sent to Ohio and is injured. How does the standard policy respond for statutory benefits?
A longshore worker is injured loading cargo on a pier adjoining navigable waters. Which act applies, and is it no-fault?
Item 3.A vs. Item 3.C on the Information Page
The policy's Information Page controls territory through three items. Item 3.A lists states where coverage is primary — the employer had operations there at inception. Item 3.C is the Other States Insurance provision: it extends coverage automatically to states the employer expands into during the term, unless that state is monopolistic or already listed in 3.A. An employer that enters a new (non-monopolistic) state covered by 3.C has automatic protection; one entering a state named in neither item has a dangerous gap until the policy is endorsed.
Monopolistic States and Stop-Gap Coverage
A handful of monopolistic state funds (e.g., Ohio, North Dakota, Washington, Wyoming) require employers to buy workers comp only from the state fund; private Part One coverage is unavailable there and cannot be added via Other States Insurance. Because the state fund provides no employers liability (Part Two), employers in those states buy stop-gap employers-liability coverage by endorsement on a CGL or separate policy to fill the Part Two gap. The exam tests recognizing that an employer expanding into a monopolistic state needs the state fund plus stop-gap, not Item 3.C.
USL&H, Jones Act, and Other Federal Acts
Federal acts cover workers state comp does not. The Longshore and Harbor Workers Compensation Act (USL&H) covers maritime workers (loading, repairing, building vessels) on or adjoining navigable waters — added by the USL&H endorsement. The Jones Act gives seamen (crew members) a negligence remedy against employers and is handled under Part Two / maritime coverage, not state comp. The Federal Employers Liability Act (FELA) covers railroad workers, and the Defense Base Act extends USL&H to overseas government contractors. Match the worker to the correct federal act on exam scenarios.
Extraterritorial and Reciprocity Rules
When a worker is injured outside their home state, extraterritorial provisions and state reciprocity agreements decide which state's comp law applies — usually the state of hire or principal employment for temporary out-of-state work, so a covered employee on a short trip still receives home-state benefits. Item 3.C Other States Insurance backstops temporary operations in new states. The exam tests recognizing that an employee temporarily working in another state is normally covered under the home state's Part One via extraterritorial rules, while a permanent new operation requires that state to be added to Item 3.A.
Federal Black Lung and the Maritime Choice
The Federal Black Lung Benefits Act covers coal-mine workers with pneumoconiosis and is funded separately from state comp. For injured seamen, the Jones Act offers a fault-based remedy that can pay more than no-fault comp, so maritime employers buy Maritime Coverage Endorsement with employers-liability-style limits. The exam wants you to route each worker correctly: longshore/harbor to USL&H, crew/seamen to the Jones Act, railroad to FELA, overseas defense contractors to the Defense Base Act, and coal miners to Black Lung.