13.4 Other States, USL&H, and Federal Acts

The Other States Insurance Provision (Part Three)

Part Three — Other States Insurance extends Part One and Part Two coverage to states listed in Item 3.C of the Information Page where the employer was not doing business at inception but later begins operations. It is the safety net for incidental and new exposures.

• States in Item 3.A are the primary covered states (Part One applies in full).
• States in Item 3.C are "other states" — coverage springs into effect if work begins there during the policy term, provided the insurer is notified.
• A state in neither Item 3.A nor 3.C has no coverage. Best practice is to list "all states except [monopolistic states] and any state already shown in 3.A" so that any new operation is automatically picked up.

When operations begin in an Item 3.C state, the policy responds as though that state had been listed in 3.A from the start, but the insured must notify the insurer at once so the exposure can be rated and premium charged. Coverage does not extend retroactively to a 3.C state if the insured began operations there before the policy began.

Trap: Employees traveling or temporarily working in a state NOT listed in 3.A or 3.C are uncovered. You cannot list a monopolistic state in Item 3.C because private insurers may not write comp there at all.

Monopolistic State Funds

A few jurisdictions sell comp only through a state-run fund, barring private insurers. These monopolistic states are commonly tested: North Dakota, Ohio, Washington, and Wyoming (Puerto Rico and the U.S. Virgin Islands also operate exclusive funds).

• An employer in a monopolistic state buys statutory benefits from the state fund, not from the NCCI policy.
• The state fund typically does not include employers liability (Part Two). To fill that gap, the employer buys a Stop Gap endorsement (employers liability coverage) on its CGL or a separate policy.

Exam Key: Monopolistic state = buy comp from the state fund + add a Stop Gap endorsement for employers liability, which the fund omits. "Competitive" state funds, by contrast, simply compete alongside private carriers.

USL&H and the Maritime/Federal Acts

State comp laws do not reach certain federal workers. Memorize who is covered by what:

The No-Fault vs. Negligence Distinction

The single most-tested federal point: USL&H, DBA, FECA, and state comp are NO-FAULT, but the Jones Act and FELA are NEGLIGENCE (fault-based) remedies. A railroad worker or a vessel crew member must prove the employer was negligent to recover — there is no automatic benefit.

• USL&H is added by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement — it is NOT automatic; the standard WC policy excludes it until endorsed.
• A dockside ship-repairer = USL&H; the ship's deckhand = Jones Act. The line is whether the person is a member of the crew.

Trap: Do not confuse USL&H (no-fault, longshore/harbor) with the Jones Act (fault-based, seamen). Examiners love the "interstate railroad worker" stem — the answer is FELA, negligence-based.

Part Three — Other States Insurance

Part Three (Other States Insurance) extends Part One coverage to states the employer lists in the Other States item of the declarations but that are not in the primary Part One states. It protects an employer that expands operations into a new state during the term, so a worker injured there is covered.

The trap: Part Three covers only the states named in Item 3.C. An employer who begins operations in a state listed nowhere on the policy has a gap — unless that state was added. Monopolistic-fund states (where the state itself sells workers comp) cannot be covered by Part Three at all and require coverage from the state fund, with employers liability added by a stop-gap endorsement.

Federal Compensation Acts

Several classes of worker are covered by federal acts instead of, or in addition to, state law:

USL&H coverage is added to the standard policy by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement. The Jones Act and FELA are fault-based remedies (the worker must show employer negligence), unlike the no-fault state and USL&H systems — a sharp exam distinction.