13.4 Other States, USL&H, and Federal Acts
Key Takeaways
- Item 3.A lists states where Part One is in force now; Item 3.C (Other States Insurance) extends coverage if the employer later works in a listed state.
- Monopolistic state funds (historically ND, OH, WA, WY) bar private policies; employers there need Stop Gap employers liability bought elsewhere.
- USL&H (added via WC 00 01 06) and FECA are federal NO-FAULT benefit systems for harbor workers and federal civilians.
- The Jones Act (seamen) and FELA (railroad workers) are NEGLIGENCE remedies requiring proof of employer fault.
- Voluntary Compensation and Foreign Voluntary Compensation endorsements extend benefits to workers outside the statute or working abroad.
Item 3.A vs Item 3.C: The States That Matter
The policy Information Page lists states in two places, and confusing them is a top exam trap:
| Item | Name | What It Does |
|---|---|---|
| 3.A | Workers Compensation states | States where coverage is fully in force now under Part One |
| 3.C | Other States Insurance | States the insurer will respond to if you later begin work there |
Other States Insurance (Item 3.C) is the safety net for unexpected expansion. If an employer suddenly sends crews into a state not listed in 3.A but listed in 3.C, coverage extends automatically. A state in neither box leaves a serious gap.
Monopolistic vs Competitive States
A handful of states run a government fund and do not allow private workers comp policies — these are monopolistic state funds. Employers there buy from the state, not from a private insurer.
- Monopolistic states historically include North Dakota, Ohio, Washington, and Wyoming.
- Because the standard policy is not sold there, employers in those states need a separate Stop Gap (Employers Liability) endorsement on another policy to get Part-Two-type protection, since the state fund provides Part One benefits only.
Trap: You cannot list a monopolistic state in Item 3.A of a private policy; coverage there comes from the state fund plus stop-gap employers liability bought elsewhere.
USL&H and the Maritime Acts
Federal acts carve specific worker classes out of state systems. The exam tests the boundary lines:
| Act | Covers | Trigger |
|---|---|---|
| USL&H (Longshore and Harbor Workers Compensation Act) | Dock, harbor, shipyard workers on navigable waters | Federal no-fault benefits |
| Jones Act (Merchant Marine Act) | Seamen (crew of a vessel) | Negligence suit against employer |
| FELA (Federal Employers Liability Act) | Railroad workers | Negligence suit, not no-fault |
| FECA | Federal civilian employees | Federal no-fault program |
USL&H is added to the standard policy via the Longshore and Harbor Workers Compensation Act Coverage Endorsement (WC 00 01 06). The sharpest distinction: USL&H and FECA are no-fault benefit systems, while the Jones Act and FELA are negligence (fault) liability systems where the worker must prove employer fault.
Voluntary Compensation and Reciprocity
Two more endorsements close coverage gaps:
- Voluntary Compensation Endorsement — extends statutory-style benefits to workers not subject to the comp law (e.g., certain farm or domestic workers, or out-of-jurisdiction employees), so the employer can offer benefits and avoid a tort suit.
- Foreign Voluntary Compensation — for employees temporarily working abroad, often packaged with endemic disease and repatriation coverage.
Extraterritorial/reciprocity rules govern a worker temporarily in another state: the home-state benefits often follow the worker, and Item 3.C plus Other States coverage keeps the policy responsive.
All States Wording vs Listing the Gap
Brokers usually request broad Item 3.C wording such as "all states except North Dakota, Ohio, Washington, Wyoming, and states designated in Item 3.A." That phrasing automatically extends coverage to new operating states while excluding monopolistic funds the private policy legally cannot cover.
Watch the endorsement matching the exam favors:
| Situation | Correct Response |
|---|---|
| Crew sent to a new competitive state | Other States Insurance (Item 3.C) |
| Operations in Ohio (monopolistic) | State fund + Stop Gap employers liability |
| Worker loading cargo on navigable water | USL&H endorsement (WC 00 01 06) |
| Employee on a six-month assignment abroad | Foreign Voluntary Compensation |
Trap: A worker permanently relocated to a state in neither 3.A nor 3.C creates an uninsured gap; only a temporary presence is reliably picked up by Other States coverage.
An employer's policy lists Iowa in Item 3.A and 'all states except monopolistic' in Item 3.C. The employer unexpectedly begins a job in Nebraska, a competitive state not listed in 3.A. What happens?
Which federal law covers maritime SEAMEN and requires the worker to prove employer negligence rather than providing automatic no-fault benefits?
The Federal Acts You Must Distinguish
Beyond state comp laws, several federal statutes cover specific worker classes, and the exam loves to ask which act applies to which worker. The acts are not covered by the standard Part One and require endorsement or a separate policy.
| Federal act | Covers |
|---|---|
| USL&H Act | Longshore, harbor, and dock workers (added by endorsement) |
| Jones Act (Merchant Marine Act) | Crew members/seamen of a vessel (negligence-based, not no-fault) |
| FELA | Interstate railroad employees (fault-based recovery) |
| Defense Base Act | Civilian employees on overseas U.S. military bases |
| Federal Employees Comp Act (FECA) | Civilian U.S. federal employees |
Exam Trap: The Jones Act and FELA are fault-based - the worker must prove employer negligence to recover, unlike no-fault state comp. The USL&H Act, by contrast, is a no-fault benefit schedule like state comp. A seaman injured aboard a vessel uses the Jones Act; a worker loading that vessel on the dock uses USL&H.
Monopolistic vs. Competitive States and Stop-Gap Coverage
Whether an employer can buy comp from a private insurer depends on the state's fund structure.
| State type | How comp is bought | Part Two (Employers Liability)? |
|---|---|---|
| Competitive (most states) | From private insurers or a competitive state fund | Included in the standard policy |
| Monopolistic | Only from the state fund | Not provided by the fund - needs Stop-Gap endorsement |
Exam Trap: In a monopolistic state, the state fund pays statutory benefits (Part One) but provides no Employers Liability (Part Two). The employer closes that gap by adding a Stop-Gap / Employers Liability endorsement to its CGL, since it cannot get Part Two from the monopolistic fund itself.