13.4 Other States, USL&H, and Federal Acts
Key Takeaways
- The OTHER STATES INSURANCE provision (Part Three, Item 3.C) extends Part One automatically to states the employer expands into AFTER the policy starts, as long as those states are listed; monopolistic states can never be listed.
- Monopolistic state funds (ND, OH, WA, WY) require employers to buy comp from the state fund, not a private insurer; private policies provide only Employers Liability there via a stop-gap endorsement.
- USL&H (Longshore and Harbor Workers Compensation Act) is a federal NO-FAULT act for maritime workers on navigable waters and adjoining areas; it is added by the WC 00 01 06 endorsement.
- FELA (railroads) and the Jones Act (seamen) are NEGLIGENCE acts, not no-fault: the worker must sue and prove employer fault, so they are not covered by standard comp benefits.
- FECA covers federal civilian employees; the Defense Base Act extends USL&H to overseas government contractors; these federal programs override the state act based on the TYPE of worker.
The Three Coverage Territories on the Policy
The WC 00 00 00 dec page divides states three ways:
| Item | Provision | Function |
|---|---|---|
| 3.A | Workers Compensation (Part One) | States where coverage applies NOW |
| 3.C | Other States Insurance (Part Three) | States the employer MAY expand into later |
| 3.D | (with endorsements) | Federal acts, USL&H, etc. |
Other States Insurance automatically extends Part One benefits if the employer begins work in a listed Item 3.C state after the policy begins. A state must be listed to be covered; you cannot list a monopolistic state.
Monopolistic State Funds
Four monopolistic states require employers to buy workers comp directly from the state fund, with no private-market option:
- North Dakota (ND)
- Ohio (OH)
- Washington (WA)
- Wyoming (WY)
Memory hook: "WD OW" or remember the four: Washington, Wyoming, North Dakota, Ohio.
Because the state fund pays only Part One statutory benefits, employers in these states still need Employers Liability. A private insurer adds it through the Stop-Gap Employers Liability endorsement, filling the Part Two gap the monopolistic fund leaves open. (Several formerly monopolistic states have since opened to private carriers; current exams test ND, OH, WA, WY.)
USL&H and Maritime Coverage
The Longshore and Harbor Workers Compensation Act (USL&H) is a federal no-fault program covering maritime workers (longshore, harbor, ship-repair, shipbuilding) injured on navigable waters or adjoining areas (piers, docks, terminals). It pays comp-style benefits but at federal benefit levels, which differ from state schedules.
| Coverage Item | Detail |
|---|---|
| Added by | Longshore and Harbor Workers Compensation Act Coverage Endorsement, WC 00 01 06 |
| Benefit basis | Federal schedule (no-fault) |
| Extension | The Defense Base Act extends USL&H to employees of U.S. government contractors overseas |
USL&H is not included automatically; the WC 00 01 06 endorsement and the correct USL&H class codes must be added or the maritime exposure is uninsured.
Negligence-Based Federal Acts (Not No-Fault)
Two federal acts replace no-fault with a negligence lawsuit, so the standard comp policy does not provide their benefits:
| Federal Act | Covered Workers | Fault Basis |
|---|---|---|
| FELA (Federal Employers Liability Act) | Interstate railroad workers | Negligence — worker must sue and prove employer fault |
| Jones Act (Merchant Marine Act, 1920) | Seamen / vessel crew | Negligence — worker sues the vessel owner/employer |
Because FELA and the Jones Act are negligence systems, the employer's exposure is a liability exposure insured separately (often via specialty maritime or railroad liability coverage), not by Part One statutory benefits.
The Full Federal Map
The type of worker, not the accident location, decides which system applies:
| Program | Covered Workers | No-Fault? |
|---|---|---|
| State act | Most employees | Yes |
| USL&H | Longshore, harbor, ship-repair | Yes (federal benefits) |
| Defense Base Act | Overseas U.S. government contractors | Yes (extends USL&H) |
| FECA | Federal civilian employees | Yes |
| FELA | Interstate railroad workers | No — negligence suit |
| Jones Act | Seamen / vessel crew | No — negligence suit |
Trap: candidates assume any maritime injury is the Jones Act. A longshoreman on a dock is USL&H (no-fault); a crew member of a vessel in navigation is the Jones Act (negligence).
Monopolistic vs. Competitive State Funds
A handful of monopolistic states require employers to buy workers' comp only from a state fund (and a private WC policy cannot be written there), while most states allow competitive state funds or private insurers. Because the monopolistic-state policy may not include employers liability, employers there often buy a separate Stop Gap endorsement on a CGL to fill the Part-Two-style gap — a tested point.
USL&H and the Maritime Acts
Federal acts cover workers the state systems do not reach:
| Act | Covers |
|---|---|
| USL&H (Longshore & Harbor Workers) | Maritime workers on navigable waters / adjoining areas (no-fault) |
| Jones Act | Seamen injured in the course of employment (negligence-based, allows suit) |
| Defense Base Act | Workers on overseas U.S. military bases |
| Federal Employees' Comp Act (FECA) | Civilian federal employees |
| Federal Employers' Liability Act (FELA) | Railroad workers (negligence-based) |
| Federal Black Lung | Coal miners with pneumoconiosis |
No-Fault vs. Negligence — The Key Split
USL&H, Defense Base, and FECA are no-fault like state comp. The Jones Act and FELA are negligence-based: the worker must prove employer fault and may sue, often recovering more than scheduled benefits. Misclassifying a seaman or railroad worker under no-fault comp is a classic exam trap, because their remedy is a tort suit, not a benefit schedule. USL&H is added to a WC policy by the Longshore endorsement, and maritime/voluntary coverages by their own endorsements.
Sorting Workers Among the Coverage Systems
The federal and state workers-compensation systems overlap, so the exam tests whether you can place a worker in the right one. State acts and the federal no-fault statutes such as the Longshore Act, the Defense Base Act, and the Federal Employees Compensation Act pay scheduled benefits without regard to fault, while the Jones Act for seamen and the Federal Employers Liability Act for railroad workers are negligence-based and let the worker sue for potentially larger tort recoveries. Misplacing a seaman or a railroad employee into a no-fault schedule is the headline trap, because their real remedy is a lawsuit.
The monopolistic-state wrinkle adds that in those states an employer buys coverage only from the state fund and may need a stop-gap endorsement on its general-liability policy to replace the missing employers-liability protection. Mapping each worker to the correct act, and noting whether that act is no-fault or negligence-based, is the skill being assessed.
An employer headquartered in Illinois opens a branch in Ohio mid-policy. Ohio is a monopolistic state fund state. How does the standard WC 00 00 00 policy respond to the new Ohio operations?
Which statement correctly distinguishes USL&H from the Jones Act?