13.4 Other States, USL&H, and Federal Acts

Where Coverage Applies: The Three Items

Part One only covers states listed in Item 3.A. of the Information Page. If an employee is injured working in a state that is not listed, there is a coverage gap. The policy solves this with Item 3.C.—Other States Insurance.

• Item 3.A. — States where you knew you had operations at policy inception (covered under Part One).
• Item 3.C. — Other States insurance; extends Part One automatically to states named here if you begin operations there during the term.

A crucial trap: monopolistic state funds can never be listed in 3.C. and are not covered by the standard policy.

Monopolistic vs. Competitive State Funds

A handful of states are monopolistic—you must buy workers comp from the state fund, not a private insurer. Historically these are Ohio, North Dakota, Washington, and Wyoming (the mnemonic learners use is the letters "OWN" plus North Dakota). In those states:

• The standard NCCI policy cannot provide Part One coverage.
• Employers Liability (Part Two) is NOT included in the state fund coverage, so employers buy a separate Stop Gap endorsement (often added to the CGL) to fill the Part Two gap.

In competitive states, employers may buy from private insurers or a state fund that competes with them.

USL&H and Maritime Exposures

Federal statutes cover workers the state acts do not. Memorize which act covers which worker:

USL&H is added to the WC policy by the Longshore and Harbor Workers Compensation Act Coverage Endorsement (WC 00 01 06). The Jones Act and FELA are liability remedies, not no-fault—the worker must prove employer negligence, which is why they are not pure workers comp.

Voluntary Compensation and Outer Continental Shelf

Two more endorsements round out the federal/extension picture:

• Voluntary Compensation Endorsement — covers employees who are exempt from the state act (so they could otherwise only sue), letting the employer voluntarily pay statutory-style benefits and reduce litigation risk.
• Outer Continental Shelf Lands Act (OCSLA) — extends USL&H benefits to workers on offshore oil/gas operations on the U.S. outer continental shelf.

Trap to remember: the Jones Act covers the crew of the vessel; USL&H covers the workers on the dock/pier loading it. Exam questions deliberately blur the line between a seaman (Jones Act) and a longshoreman (USL&H).

The Other States Insurance Problem

A standard workers compensation policy lists covered states in Item 3.A. of the Information Page. Those are the only states whose benefits the insurer agreed to pay. If an employer sends a worker into a state not listed and an injury occurs there, the policy may not respond, exposing the employer to that state's penalties for operating without coverage. The fix is Item 3.C., Other States Insurance, which extends coverage to states the insured was not aware it would operate in, provided those states are not already listed in 3.A. and are not monopolistic states.

Four states run monopolistic state funds where employers must buy coverage from the state, not a private insurer: North Dakota, Ohio, Washington, and Wyoming (mnemonic: ND, OH, WA, WY). Other States Insurance cannot extend coverage into a monopolistic state because private policies are barred there; an employer entering one of those states must buy from the state fund and add stop-gap employers-liability coverage (often via the CGL) because the monopolistic fund provides no Part Two equivalent.

Several federal acts override or supplement state coverage for specific worker groups, and the exam tests which act applies to whom. The Federal Employees Compensation Act (FECA) covers civilian federal employees. The Federal Employers Liability Act (FELA) is not a no-fault system at all; it lets interstate railroad workers sue the railroad and prove negligence, much like the Jones Act does for seamen. The Longshore and Harbor Workers Compensation Act (USL&H) covers maritime workers on navigable waters who are not crew members, and the Defense Base Act extends USL&H to civilian contractors on overseas U.S. military bases.

Worked scenario: an Illinois employer with Item 3.A. listing only Illinois sends a crew to do a one-off job in Indiana. An injury occurs in Indiana. If Item 3.C. lists "all states except those in 3.A. and monopolistic states," Indiana benefits are paid. Had the crew instead gone to Ohio, Other States Insurance could not respond and the employer would need the Ohio state fund plus stop-gap liability.

Key Takeaways

Item 3.A. lists scheduled states and Item 3.C. (Other States Insurance) extends coverage to unscheduled, non-monopolistic states. The four monopolistic states (North Dakota, Ohio, Washington, Wyoming) require state-fund coverage plus stop-gap employers liability. Federal acts apply by worker class: FECA for federal civilians, FELA for railroad workers, the Jones Act for seamen, USL&H for longshoremen, and the Defense Base Act for overseas contractors.