13.4 Other States, USL&H, and Federal Acts

The three coverage items on the Information Page

The WC policy is a multi-state contract whose geography is controlled by the Information Page:

• Item 3.A. — Workers Compensation states (listed/scheduled states): the states where Part One statutory benefits apply. The named states must be listed at inception.
• Item 3.B. — Employers Liability limits: the Part Two dollar limits.
• Item 3.C. — Other States Insurance: automatic coverage in states the employer might expand into during the term.

The interplay between 3.A. and 3.C. is heavily tested.

Other States Insurance (Item 3.C.)

Other States Insurance provides Part One benefits if the employer begins operations in a state listed in 3.C. that was not in 3.A. at inception. It protects against the gap created when a business unexpectedly expands.

Critical rules and traps:

• A state can be listed in 3.A. or 3.C., but not both.
• Monopolistic-fund states can NEVER be listed in 3.C. (and not in 3.A. either) — coverage there must come from the state fund. Listing ND, OH, WA, or WY in 3.C. does nothing.
• If the employer begins work in a brand-new state that is in neither 3.A. nor 3.C., there may be no coverage until reported. Many insureds use the phrase 'all states except those listed in 3.A. and the monopolistic states' in 3.C. for broad protection.

Federal compensation acts (not state WC)

Some workers are covered by federal statutes instead of, or in addition to, state law. These exposures are often excluded from the standard policy and added by endorsement:

Endorsing USL&H and maritime exposures

Because the standard policy excludes federal-act obligations, they are scheduled back in:

• USL&H Act Coverage Endorsement (WC 00 01 06) — adds Longshore Act benefits for qualifying maritime/dock workers.
• Maritime Coverage Endorsement — adds liability under admiralty law / the Jones Act for vessel crew.
• Voluntary Compensation Endorsement — extends benefits, on a voluntary basis, to employees not subject to any WC law (e.g., farm or domestic workers in some states), treating them as if covered so the employer avoids a negligence suit.

Trap: USL&H covers dock and harbor workers, while the Jones Act covers the crew of the vessel itself — examiners love to flip the two. FELA = railroads, and it is fault-based, unlike no-fault state WC.

No-fault vs. fault-based federal acts

A crucial distinction: USL&H and the Defense Base Act are no-fault compensation systems modeled on state WC, paying scheduled benefits without proof of negligence. By contrast, the Jones Act and FELA are fault-based — the worker must sue and prove the employer's negligence to recover, but in exchange can pursue full tort damages (including pain and suffering) rather than a limited schedule.

This is why a railroad worker's remedy looks like a lawsuit while a longshoreman's looks like a benefit claim. Examiners pair the act with the wrong system to trip you up: 'FELA is a no-fault schedule' is false; 'the Jones Act lets a seaman sue the employer for negligence' is true.

Extraterritorial and reciprocity issues

When an employee normally working in one state is temporarily injured in another, extraterritorial provisions and reciprocity rules decide which state's law applies. Most states extend their own benefits to their workers temporarily out of state, and recognize other states' coverage for visiting workers, avoiding double coverage gaps.

A practical producer point: even with broad Other States Insurance in 3.C., a long-term operation in a new state should be added to 3.A. so the insurer files the correct rates and the state's regulators recognize the coverage. Relying on 3.C. for a permanent new location is a common error — 3.C. is meant for incidental or newly begun operations, not a second headquarters.

Stop-gap coverage for monopolistic states

Because monopolistic state funds sell Part One only — no Employers Liability — an employer with operations in ND, OH, WA, or WY has a Part Two-shaped hole. The fix is a stop-gap Employers Liability endorsement added to the CGL (the CGL's employer-liability exclusion is amended to give back EL coverage for those states).

Walk the logic on the exam: monopolistic state → buy statutory benefits from the state fund (Part One equivalent) → add stop-gap EL on the CGL (Part Two equivalent). You can NOT solve this by listing the monopolistic state in 3.A. or 3.C. of an NCCI policy; those items do nothing for a monopolistic state. This pairing — state fund plus CGL stop-gap — is one of the most reliable test items in the federal/other-states topic.