Exclusively from Foa & Son
Speaking of workers compensation, here’s a common and often misunderstood problem with workers compensation policies we occasionally see.
If you look at the first page of the Declarations in a standard workers compensation insurance policy, you’ll see Item Three – Coverage right in the middle of the page. Item 3.A. is Workers Compensation Insurance: it says “Part One of the policy applies to the Workers Compensation Law of the states listed here:”. The states in which you have employees should all be listed here.
Workers Compensation laws are state specific, and all different. Unlike most all other policies, a workers compensation policy does not define coverage; it just says, in effect, that whatever the law says workers compensation is in a particular state, that’s what the policy covers. For that reason every workers compensation policy will list at least one state in Item 3.A.
There is also Item 3.C., Other States Insurance. This will usually name “all states”, except four named monopolistic states where workers compensation can only be purchased though state programs, and also excepting states specifically named in Item 3.A.
Why is all this important? If you get into the policy itself, it states it will provide coverage according to the workers compensation laws of the states listed in Item 3.A. Under the Other States section, it says it will also provide coverage for “Other States” if you begin work there after the policy is effective. Good news; you have automatic coverage if you hire employees in other states.
But…this same section also says “If you have work on the effective date of this policy in any state not listed in Item 3.A. ….coverage will not be afforded for that state unless we are notified within thirty days.” (Italics added.)
What’s it mean? If you add employees in other states during the policy, they are automatically covered (except four monopolistic states). But… if you have employees in other states at policy inception, and you fail to list those states on the policy, you are out of luck… no insurance.
Solution? Quite simple. With every renewal make sure you list at policy inception all states where you have employees, even if only temporary. This is a small but important detail to pay attention to.