13.4 Other States, USL&H, and Federal Acts

Reading the Information Page: Items 3.A, 3.B, 3.C

The coverage territory of a workers comp policy is controlled by three boxes on the Information Page, and the exam tests each:

• Item 3.A — Workers Compensation Insurance. Lists the states where Part One applies on day one. Statutory benefits are paid only for jobs in these states.
• Item 3.B — Employers Liability Insurance. States the Part Two limits.
• Item 3.C — Other States Insurance. Lists states where coverage will apply automatically if operations begin there during the policy term.

Other States Insurance (Item 3.C)

A business that may expand into new states needs Other States Insurance. If a state is listed in Item 3.C, and the employer begins operations there mid-term, Part One coverage applies as if that state had been listed in 3.A from inception. Crucial exam rules:

• A state cannot appear in both 3.A and 3.C.
• Monopolistic-fund states cannot be listed in 3.C — you cannot buy private comp there (see below).
• If you know in advance you will operate in a state, list it in 3.A, not 3.C; relying on 3.C for known operations is an audit/coverage trap.
• Some insureds use the broad phrase 'all states except those listed in 3.A and the monopolistic states' in 3.C for maximum flexibility.

Monopolistic Fund States

Four jurisdictions require employers to buy workers comp from a state fund, not a private insurer: North Dakota, Ohio, Washington, and Wyoming (Puerto Rico and the U.S. Virgin Islands are also monopolistic). A handy memory hook is 'NOWW.' In these states a private WC policy cannot provide Part One. However, employers there often still buy a Stop Gap endorsement to add employers liability (Part Two-type) coverage, because the state fund provides no employers liability protection.

USL&H — The Longshore and Harbor Workers' Compensation Act

State acts do not cover maritime employment. The U.S. Longshore and Harbor Workers' Compensation Act (USL&H or LHWCA) is a federal workers comp act covering employees who load, unload, build, or repair vessels and who work on the navigable waters of the U.S. or adjoining piers, docks, and terminals. USL&H benefits are higher than most state acts. Coverage is excluded from the standard policy unless added by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement (WC 00 01 06). The 'situs and status' test (the worker's location AND maritime job function) determines applicability.

The Jones Act and the Relationship to USL&H

The exam loves to contrast these two:

Key point: a true seaman is NOT covered by USL&H; instead the Jones Act gives the seaman the right to sue the employer for negligence. The two acts are mutually exclusive — the worker is either a covered longshore worker (USL&H, no-fault) OR a seaman (Jones Act, must sue). Jones Act exposure is typically insured under a Maritime Coverage Endorsement or marine P&I (Protection and Indemnity), not the standard WC policy.

Other Federal Acts

• Federal Employees' Compensation Act (FECA) — covers civilian federal government employees.
• Federal Employers' Liability Act (FELA) — covers interstate railroad workers; like the Jones Act, FELA is a negligence lawsuit system (a modified-comparative-fault tort right), NOT no-fault comp. This is a frequent trap: a railroad worker injured in interstate commerce must sue under FELA rather than file a no-fault claim.
• Defense Base Act (DBA) — extends USL&H to civilians working on U.S. military bases overseas.
• Migrant and Seasonal Agricultural Worker Protection and the Outer Continental Shelf Lands Act also extend federal coverage to specific worker groups.

Quick Decision Tree

Worker on land in a private-insurance state -> state act (Part One, 3.A/3.C). Vessel crew member -> Jones Act (sue). Dockworker loading ships -> USL&H endorsement. Interstate railroad worker -> FELA (sue). Federal civilian employee -> FECA.

Extraterritorial Provisions and Reciprocity

Workers frequently cross state lines, so each state act includes extraterritorial rules: an employee normally working in State A but temporarily sent to State B generally remains covered under State A's act for a limited time. Many states sign reciprocity agreements recognizing one another's coverage so an employer is not forced to buy duplicate policies for short trips. The danger arises when a temporary assignment becomes a permanent operation in the new state — at that point Item 3.A (or a 3.C state activating) must respond, or the employer is uninsured under that state's mandatory law.

Stop Gap Coverage in Monopolistic States in Detail

Because the four monopolistic state funds (North Dakota, Ohio, Washington, Wyoming) provide statutory benefits but no employers liability, an employer there faces uninsured exposure to third-party-over and consortium suits. The Stop Gap endorsement — added either to the WC policy in non-monopolistic states or, more commonly, to the employer's commercial general liability (CGL) policy — fills that Part Two-type gap. The exam tests both that monopolistic states cannot be listed in 3.C and that Stop Gap restores the missing employers liability protection.

Matching Federal Acts to Workers

A reliable way to keep the federal acts straight is to ask two questions: (1) Is the work maritime? and (2) Is the remedy no-fault or a lawsuit? Maritime longshore work near navigable waters is USL&H, no-fault. Maritime crew (seamen) is Jones Act, lawsuit. Non-maritime interstate railroading is FELA, lawsuit. Federal civilian employment is FECA, no-fault. Overseas civilian work on a U.S. base is the Defense Base Act, which simply applies USL&H benefits abroad. Sorting any fact pattern through those two questions yields the correct act and tells you whether the worker collects benefits or must prove negligence in court.

The Coverage Gap Trap

The single most common exam error is assuming the standard policy automatically covers maritime or new-state exposures. It does not: USL&H, Jones Act, and out-of-state operations all require affirmative action (an endorsement or a 3.A/3.C listing). When a fact pattern describes a dockworker, a ship's crew, or a sudden expansion into an unlisted state, look for the missing endorsement or Information Page entry as the source of the gap.