15.3 The Workers' Compensation and Employers Liability Policy, Federal Acts & Other Sources of Coverage
Key Takeaways
- The standard workers' compensation and employers liability policy has a General Section plus six Parts; Part One pays statutory benefits with no dollar limit and Part Two carries three separate employers liability limits.
- Part Two answers third-party-over actions, consequential bodily injury claims by family members, dual capacity claims and care and loss of services — the exposures exclusive remedy does not reach.
- Part Three other states insurance does not apply in monopolistic fund states, where the employer must buy from the state fund and add stop-gap employers liability.
- FELA covers interstate railroad workers and the Jones Act covers seamen, both on a negligence standard, while USL&H provides no-fault benefits to longshore and harbor workers on navigable waters and adjoining areas.
- The New York State Insurance Fund under WCL §§ 76–100 is a competitive state fund that must accept any New York employer, and authorised self-insurers and group trusts operate under WCL §§ 50 and 60–75-a.
The Workers' Compensation and Employers Liability Policy, Federal Acts & Other Sources of Coverage
Exam Focus: The standard NCCI Workers Compensation and Employers Liability Insurance Policy is built from a General Section plus six numbered Parts. Know what each Part does, why Part Two exists at all given exclusive remedy, and which federal statute covers railroad workers (FELA), maritime workers on navigable waters ashore (USL&H) and seamen (the Jones Act).
Structure of the Standard Policy
General Section
Identifies the insured, the workplaces covered, the policy period and the effect of the workplaces listed in Item 4 of the Information Page. The Information Page (the policy's declarations) shows the states in Item 3.A where Part One applies, the Part Two limits in Item 3.B, the other-states insurance in Item 3.C, and the classifications and rates in Item 4.
Part One — Workers' Compensation Insurance
The insurer pays promptly when due the benefits required of the insured by the workers' compensation law of any state listed in Item 3.A. There is no dollar limit on Part One — the limit is whatever the statute requires. Part One also obliges the insurer to defend proceedings and pay the costs of investigation and defence.
Part Two — Employers Liability Insurance
Part Two covers the employer's liability for work-related bodily injury that falls outside the compensation statute. Exclusive remedy is broad but not total, and Part Two is what answers the gaps:
- Third-party-over actions — a claim over against the employer where the worker sustained a grave injury under WCL § 11.
- Consequential bodily injury — claims by a spouse, child, parent, brother or sister of the injured employee, such as loss of consortium.
- Dual capacity — liability incurred in a capacity other than as employer, such as manufacturer of the machine that injured the worker.
- Care and loss of services.
Part Two carries three separate limits: bodily injury by accident — each accident; bodily injury by disease — policy limit (an aggregate); and bodily injury by disease — each employee. A standard set is $100,000/$500,000/$100,000, commonly increased to $1,000,000 to satisfy umbrella attachment requirements.
Part Three — Other States Insurance
Extends Part One coverage to operations in states listed in Item 3.C that the insured begins after the effective date, provided the insured was not already conducting operations there and reports the exposure to the insurer within 30 days. Part Three does not apply to monopolistic fund states — an employer expanding into one of those must buy coverage from the fund and add stop-gap employers liability to a general liability or compensation policy.
Part Four — Your Duties If Injury Occurs
The insured must provide prompt notice, give the insurer the information it needs, cooperate in the investigation and defence, and do nothing after an injury that would interfere with the insurer's right to recover from others.
Part Five — Premium
Premium is based on payroll (remuneration) per $100 by classification code, adjusted by the experience modification factor and subject to audit. The policy is auditable: the deposit premium is an estimate and the final premium is determined by audit after expiry.
Part Six — Conditions
Inspection rights, long-term policy provisions, transfer of rights and duties, cancellation, and sole representative.
| Part | Subject | Limit structure |
|---|---|---|
| One | Statutory compensation benefits | No dollar limit — statutory |
| Two | Employers liability | Three limits: each accident / disease policy limit / disease each employee |
| Three | Other states insurance | Follows Part One in scheduled states |
| Four | Insured's duties after injury | — |
| Five | Premium, payroll basis, audit | — |
| Six | Conditions | — |
Selected Endorsements
- Voluntary Compensation Endorsement — extends benefits on a voluntary basis to employees not subject to the compensation law (for example certain agricultural or domestic workers), in exchange for a release.
- Foreign Coverage Endorsement — responds to employees temporarily working outside the United States, including repatriation expense and endemic disease.
- Waiver of Our Right to Recover From Others (Subrogation Waiver) — commonly required by contract from general contractors and property owners.
- Alternate Employer Endorsement — protects a labour-supply arrangement by extending coverage to the alternate employer.
Federal Workers' Compensation Acts
Three federal schemes sit outside state compensation and are named in the Series 17-70 outline.
Federal Employers Liability Act (FELA), 45 U.S.C. §§ 51–60
Covers interstate railroad workers. FELA is not a no-fault compensation statute — it is a negligence statute. The worker must prove the railroad's negligence, but the standard is relaxed (“in whole or in part” causation), assumption of risk is abolished, and damages including pain and suffering are recoverable in court, with contributory negligence reducing rather than barring recovery.
U.S. Longshore and Harbor Workers' Compensation Act (USL&H), 33 U.S.C. § 904
A federal no-fault compensation statute covering maritime employment on the navigable waters of the United States, including adjoining piers, wharves, dry docks, terminals and marine railways. It fills the gap between state compensation (which cannot reach navigable waters) and the Jones Act (which covers only seamen). Coverage is added to a compensation policy by the USL&H Act Coverage Endorsement. The Defense Base Act extends USL&H to civilian contractors on U.S. military bases abroad.
The Jones Act (Merchant Marine Act), 46 U.S.C. § 688
Covers seamen — masters and members of the crew of a vessel. Like FELA, it is a negligence-based remedy rather than no-fault: a seaman injured in the course of employment may sue the employer for negligence, and the Jones Act expressly incorporates the FELA remedies. Seamen also have the ancient general-maritime rights to maintenance and cure (living expenses and medical care until maximum medical improvement) and to recover for unseaworthiness of the vessel. Jones Act liability is typically insured under Protection and Indemnity (P&I) coverage — see Section 9.2.
| Statute | Who is covered | Fault standard |
|---|---|---|
| State WC (New York WCL) | Most land-based employees | No-fault |
| FELA | Interstate railroad workers | Negligence |
| USL&H | Longshore and harbor workers on navigable waters and adjoining areas | No-fault |
| Jones Act | Seamen — masters and crew of a vessel | Negligence |
Discrimination Rule: if the claimant is a seaman, think Jones Act and P&I. If the claimant loads and unloads ships from the pier, think USL&H. If the claimant works for a railroad, think FELA. Everyone else on land in New York goes to the Workers' Compensation Board.
Other Sources of New York Coverage
The New York State Insurance Fund (NYSIF)
Created under WCL §§ 76–100, NYSIF is a competitive state fund and the guaranteed market of last resort: it must accept any New York employer that applies. It is the largest workers' compensation carrier in the state and also administers statutory disability benefits coverage.
Individual and Group Self-Insurance
Under WCL §§ 50 and 60–75-a, and Board regulations at 12 NYCRR Parts 317.1–317.22, an employer of sufficient financial strength may be authorised to self-insure, posting security and furnishing proof of ability to pay. Group self-insured trusts allow smaller employers in a similar industry to pool. Group trust members are subject to joint and several liability for the trust's obligations — the feature that produced New York's group trust deficits and the reason the Board tightened oversight.
Statutory Disability Benefits (DBL) and Paid Family Leave
Separate from workers' compensation, New York's Disability Benefits Law covers off-the-job injury and illness, paying 50% of average weekly wages to a statutory maximum for up to 26 weeks. Paid Family Leave is attached to the same policy. Neither responds to a work-related injury — they are the counterpart to compensation, not a substitute for it.
A machine operator is injured by a press, receives New York workers’ compensation benefits, and then sues the press manufacturer. The manufacturer brings a claim over against the employer, alleging the worker lost the index finger of the right hand. Which Part of the standard workers’ compensation and employers liability policy responds to the employer’s defence and any judgment?
A deckhand who is a member of the crew of a tugboat operating in New York Harbor is injured when a winch fails. Which remedy applies and on what standard?