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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...
CEO and CFP®
UPDATED: Sep 30, 2022
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Most states require some form of workers compensation insurance and carry different laws regarding benefits.
Workers comp coverage offers benefits to employees of companies and must be purchased by employers. Workers compensation coverage is under the jurisdiction of each individual state. Even though there are insurance carriers that write insurance in all 50 states, there are some monopolistic states where workers compensation coverage must be purchased directly from the state.
A workers compensation policy has three parts; state benefits, referred to simply as work comp, employer’s liability, and “other states” benefits (discussed here).
Section 3C: Other States
Coverage part 3 of the workers compensation insurance policy details the “other states” provision possibly included in a workers compensation insurance policy.
This section of the policy is straightforward and resembles personal auto insurance, whereby the policy will automatically adapt to the limits and provisions of any state where your employees are working, regardless of what state the policy was originally designed for.
Example: You own a construction company in Illinois, where you originally purchased your workers compensation policy, and bid on and won a job in Missouri, requiring your employees to work across state lines.
In the event one of your employees suffers bodily injury resulting from a work-related accident, your Illinois policy would automatically adjust to the necessary limits and provisions of Missouri state law.
However, the insured employer would not have to pay a higher premium above and beyond that dictated on the original policy.
If your business has employees that cross state lines or travel out of the state to conduct any work, then they should be looking under section 3C of their worker’s comp policy. Section 3C can be found under Part Three-Other States Insurance. There’s a list of states where the insurance company is authorized to provide workers compensation coverage in that state.
Section 3C means that policy benefits can comply with state requirements when an employee is injured in that jurisdiction. The endorsement expands the policy so that an injured employee can get compensation benefits as listed by the other states listed on the endorsement. However, coverage only applies to listed states, and cannot apply to monopolistic fund states.
This section allows the policy benefits to comply with the statutory benefits required by the state where an employee is injured, but in which the insured does not currently have ongoing operations during the policy period.
As mentioned earlier, each state has different laws, so be sure to contact your employer or state department of insurance to determine what benefits you may be eligible for as a result of a work-related accident.