insurance community university insight on workers’ compensation 1

Insurance Community University

Insight on Workers’ Compensation

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Disclaimer

Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state

jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by Insight do not

modify or revise insurance policy language. The authors of these materials, Insight Insurance Consultants is a division of Insight Consulting

and Management Inc. In providing these materials, Insight assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of

the instructional materials provided. Copyright 2010 – 2011 All Rights Reserved

www.insurancecommunitycenter.comLaurie: 714.803.5830 [email protected]

Marjorie: 714.206.9583 [email protected]

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Your Instructor Today

Casey Roberts, ACSR, AFIS, CICLaurus Insurance Consulting

707.477.0913Casey@laurusinsuranceconsulting.comwww.laurusinsuranceconsulting.com

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Objectives

• Independent contractors, leased and temporary employees

• Locations: employer, work sites, hire, residency

• Third party action over claims and coverage

• Government contracts• Foreign Workers’ Compensation

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Workers’ Compensation Overview

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Workers’ Compensation Overview

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Monopolistic States

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Leased, Temporary Employees and Independent Contractors


The Act

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Employee v. Independent Contractor

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Employee Definition

• An employee is a (natural) person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance

– Black's Law Dictionary

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IC Definition

• A person or organization hired to perform services under an express or implied contract– NOT subject to hiring party’s control or

manner and means of performing the services

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IRS Guidelines for IC Status

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IRS Guidelines for IC (Hired Party)

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Worker’s Compensation Control

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Locations: Employer, Work Sites, Hire, Residency


Multi-state Exposures

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Multi-state Exposures

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Part 3A – Workers’ Compensation

• List all states in which insured has operations known or expected

• If the exposure is known or expected, it is intended that such state should be listed on the information page

• Activates Compensation Laws for those states

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Part 3C – Other States Insurance

• Allows state benefits to apply in all states allowed by law and not named in 3A– Intended only for the unexpected exposure.

• Work in progress as of inception date will NOT be covered under 3C – MUST be listed in 3A

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Part 3C – Other States Insurance

• Use broad language under 3C “All states except monopolistic states and

states designated in 3A.”

• Without this language – domicile state benefits apply– May be lower than state of injury– Employer will be liable for the difference– Coverage through State Compensation

funds extend state benefits only

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Coverage Examples


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Third Party Action Over Claims And Coverage


Third party over or Action-Over Indemnity

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Example

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Example

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Government Contracts


Government Contracts

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Defense Base Act Background

• Passed by US Congress in 1941• Primary goal

– Cover workers on military bases outside the United States

• Today, after several amendments now includes all public works contracts– Any military installation outside the US– Anywhere outside the US

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Defense Base Act Background

• DBA coverage required for any employee, regardless of their nationality or home country

• Local nationals or third country nationals are covered under the DBA

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Defense Base Act Overview

• Penalties for failure to provide DBA are severe• Failure to procure DBA coverage exposes

employers to penalties – Employers are subject to common law suits– No coverage applies– No common law defenses– No need to prove negligence– Claimants or their heirs need only file suit and do

not have to prove negligence– Suits are brought in Federal Court

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DBA Doctrines

• The Zone of Special Danger doctrine– Employee’s injury or death arises out of or

in the course of employment– The injury takes place in a location where

circumstances of employment place the employee in a zone of danger

– Injury need to be strictly related to specific job duties

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DBA Doctrines

• The Reasonable Recreation doctrine– Employee’s injury arises out of or in the

course of the employer’s furnished, funded or promoted recreational activities

– Includes some non-sponsored activities

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Coverage

• Full medical care• Weekly benefits - % of salary• Re-employment, when possible• Education benefits• Scheduled benefits• Lifetime benefits for lost earnings or

earning capacity on non-scheduled injuries

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Coverage

• A D & D coverage– 24/7 most employees– $50,000 U.S. nationals– $25,000 third country nationals– $2,500 local nationals– Some insurers will increase

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Who Writes DBA

• Long list of authorized insurers• Majority written through

– Ace Marine– Chartis– CNA

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Foreign Workers’ Compensation


Foreign Voluntary Workers’ Compensation

• “Standard” WC coverage extends to extra-territorial workers

• May be inadequate to coverage additional risk– Disease– Foreign nationals– Repatriation

• FVWC provides additional coverage

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Foreign Voluntary Workers’ Compensation

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Foreign Voluntary Workers’ Compensation Coverage

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Standardized Solutions

• Foreign Coverage Endorsement, WC 48 06 03 11 87– Covers a person hired in the U. S. Working

temporarily in a foreign country– Covers BI by accident or disease, including

any endemic disease– War, invasion, and hostilities-caused

injuries not covered

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• Form WC 48 06 03 22 87– Lists the employees to be covered and

which state's benefits are to apply to them– Pays the benefits for the listed state to an

employee injured in a foreign country

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• Excess Repatriation Expenses, Form WC 48 06 03– Covers the difference between transporting

a person under medical care and the normal expenses to have the person travel back to the U.S.

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Policy Provisions

• Extend coverage to include “Travel Assistance” – employees and dependents

• Include coverage for “foreign nationals”– working for the insured– working outside their country of origin

• Include Employers Liability– some jurisdictions require this coverage is placed

locally

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Foreign Admitted WC

• Many countries require compulsory WC coverage – FVWC does not substitute

• Admitted v. Non-admitted– Check with international underwriting desk

to determine which is required by each country of exposure

• Can be written stand-alone or with an international package policy

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Summary

• Although the majority of your clients will need standard solutions, some will need extra attention

• These situations can occur with small, medium or large accounts– Always ask your client about their business

objectives and risks for the upcoming year

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insurance community university insight on workers’ compensation 1

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