13.4 Other States, USL&H, and Federal Acts

Part Three — Other States Insurance

When an employer might expand into a state not listed in Item 3.A, Part Three — Other States Insurance provides springing coverage. The states are named in Item 3.C of the Information Page. Key rules:

• Coverage applies only to states listed in Item 3.C and only if the employer was not doing business there on the effective date.
• If a new operation begins in a 3.C state during the term, the policy treats it as if that state were added to 3.A.
• A producer may list "all states except" the state(s) of current operation and the monopolistic states — never list a monopolistic state in 3.C.

Monopolistic Fund States

In monopolistic states, employers must buy WC from a state-operated fund; private carriers cannot write Part One there. The classic monopolistic jurisdictions tested are North Dakota, Ohio, Washington, and Wyoming (plus U.S. territories such as Puerto Rico and the U.S. Virgin Islands).

A critical gap: monopolistic state funds typically provide statutory benefits only and no Employers Liability (Part Two) coverage. To fill that tort gap, the employer buys Stop Gap employers-liability coverage, usually endorsed onto a CGL policy or a separate employers-liability policy. Expect a question linking 'monopolistic state' to 'Stop Gap endorsement.'

Federal Acts the State System Does Not Cover

Some workers fall outside state WC and under federal acts. The standard WC policy can cover several of these by endorsement; others require a separate market.

USL&H vs Jones Act — the Classic Distinction

The most-tested pairing: USL&H is no-fault workers-compensation-style coverage for shore-side maritime workers (longshoremen, dock workers, ship repairers), added by the USL&H endorsement (WC 00 01 06) to the WC policy. The Jones Act is not a no-fault WC remedy — it gives a vessel crew member (seaman) the right to sue the employer for negligence, similar to FELA for railroaders. Jones Act liability is insured under Maritime/Protection & Indemnity, not Part One. If the worker is a crew member of a vessel in navigation, think Jones Act; if a dock/longshore worker, think USL&H.

Matching the Worker to the Right Federal Act

Federal workers fall outside state workers comp, and the exam tests matching each worker to the right act. The USL&H Act covers shore-side maritime workers (longshoremen, harbor and dock workers, ship repairers) on navigable waters and adjoining areas on a no-fault basis, added by the USL&H endorsement to the WC policy. The Jones Act gives a seaman (crew member of a vessel) the right to sue the employer for negligence, a fault-based remedy that is not part of the no-fault WC system and is insured under marine/protection-and-indemnity coverage instead.

The Federal Employers Liability Act (FELA) covers interstate railroad workers on a negligence basis. The Defense Base Act extends USL&H to civilian contractors on overseas U.S. bases. The recurring trap is treating the fault-based Jones Act and FELA like no-fault workers comp.

Monopolistic States and the Coverage Gap

In monopolistic-fund states, employers must buy Part One statutory coverage from the state fund, and private carriers cannot write it. The classic tested jurisdictions are North Dakota, Ohio, Washington, and Wyoming, plus territories such as Puerto Rico and the U.S. Virgin Islands. A critical gap follows: the state fund usually provides Part One only, leaving the employer without Employers Liability (Part Two). The fix is a Stop Gap Liability endorsement, often added to a CGL or a separate policy, to restore the Part Two tort protection the fund does not provide.

An employer with operations in a monopolistic state who buys only the state fund coverage is exposed to third-party-over and consortium suits.

Extraterritorial Coverage and Reciprocity

When an employee normally working in a 3.A state is temporarily sent to another state, extraterritorial provisions and reciprocity agreements generally let the home-state benefits follow the worker, avoiding the need to be licensed in every state visited. If the assignment becomes permanent or substantial, the employer must add that state to the policy.

The interplay of Item 3.A (primary), Item 3.C (other states), extraterritoriality, monopolistic funds, and federal acts is exactly why a multi-state employer must map every work location to a coverage source — a gap in any one of them leaves injured workers and the employer exposed, and the exam builds questions around finding that gap.

Quick Federal-Act Recall Table

For rapid recall: USL&H = shore-side maritime, no-fault, WC endorsement; Jones Act = vessel crew (seaman), negligence suit, marine P&I; FELA = interstate railroad workers, negligence; Defense Base Act = overseas-base civilian contractors, extends USL&H; Federal Black Lung = coal miners; Federal Employees' Compensation Act (FECA) = U.S. government civilian employees. Memorizing which acts are no-fault (USL&H, Defense Base, FECA) versus fault-based negligence remedies (Jones Act, FELA) is the single highest-yield distinction in this section.