13.4 Other States, USL&H, and Federal Acts

Part Three: Other States Insurance

Part Three — Other States Insurance extends the Part One statutory promise to states the employer is not yet operating in but lists in Item 3.C of the Information Page. Its purpose is to avoid a coverage gap if the employer suddenly begins operations in a new state during the policy term.

The key distinction the exam tests:

• Item 3.A lists states where the employer currently has operations — Part One covers those.
• Item 3.C lists anticipated/other states — Part Three covers those if work begins there.

Exam Key: A state the employer already operates in must be in Item 3.A. If it is listed only in 3.C, coverage is defective — Part Three does not cover a state in which the employer was already doing business when the policy began. Producers often list 'all states except those listed in 3.A and monopolistic states' to capture unplanned expansion.

Part Three has a built-in notice duty: if the employer begins work in a 3.C state, the policy generally requires the employer to tell the insurer at once (within a short window) so premium and the state's act can be applied. If the employer was already operating in that state when the period began, neither Part One nor Part Three responds — that is the gap the exam tests.

Monopolistic State Funds

A handful of states are monopolistic — employers must buy workers comp only from the state fund, and a private insurer's standard WC policy cannot provide Part One coverage there. The traditional monopolistic states are North Dakota, Ohio, Washington, and Wyoming (plus certain territories). Because the state fund does not provide it, an employer in a monopolistic state still needs stop-gap employers liability coverage (Part Two-type protection), usually added to a CGL policy by endorsement, since the state fund sells only the statutory comp benefit.

Trap: Do not list a monopolistic state in Item 3.A or 3.C of a private policy expecting Part One to respond — it cannot. Coverage must come from the state fund.

Federal Acts: USL&H and the Defense Base Act (Benefit Acts)

Certain workers fall under federal statutes rather than ordinary state comp. Two of them are no-fault benefit acts that look like state comp:

• USL&H — Longshore and Harbor Workers' Compensation Act: covers maritime employees such as longshoremen, ship repairers, and harbor workers injured on navigable waters or on adjoining piers, docks, and terminals. Coverage is not automatic — it must be added by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement. Benefits are generally richer than most state acts.
• Defense Base Act (DBA): extends USL&H-style benefits to civilian employees on U.S. military bases overseas and under certain government contracts performed abroad.

Because both pay statutory benefits regardless of fault, an injured worker does not have to prove the employer was negligent — the same bargain as ordinary state comp.

Federal Acts: Jones Act and FELA (Negligence Acts)

Two other federal statutes are fault-based liability remedies, not no-fault comp — the worker must prove employer negligence to recover:

• Jones Act (Merchant Marine Act): covers seamen, meaning crew members of a vessel in navigation. It is not a no-fault comp law; it lets the seaman sue the employer for negligence.
• FELA — Federal Employers Liability Act: covers interstate railroad workers and, like the Jones Act, provides a negligence remedy rather than automatic benefits.

Exam Key: Sort the four federal acts into two buckets. USL&H and the Defense Base Act are benefit (comp-style, no-fault) acts. The Jones Act and FELA are negligence/liability acts — the worker must prove employer fault. That fault-versus-no-fault split is a favorite distractor: if the answer choice says a seaman or railroad worker 'sues for negligence,' it is Jones Act/FELA, not comp.

Part Three, USL&H, and the Major Federal Acts

State WC laws stop at the state line and do not cover certain federal-jurisdiction workers, so several federal acts and policy provisions fill the gaps:

Exam trap: USL&H covers shore-based maritime workers (longshoremen, dock/harbor workers); the Jones Act covers SEAMEN/crew aboard a vessel - this longshoreman-vs-seaman line is heavily tested. FELA and the Jones Act are FAULT-based (the worker must prove employer negligence), unlike no-fault state WC. Part Three (Other States) must list a state before operations begin there; an unlisted state can leave a gap, which is why "all states except monopolistic" is often entered.