Workers’ Comp

Workers’ compensation coverage pays for medical care and physical rehabilitation of employees injured at work and helps to replace lost wages while they are unable to work. Additionally, this coverage protects an employer from being sued by an injured worker in most cases.


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Workers Compensation coverages are standard because of state mandates but variances occur because each state establishes its own workers’ compensation statute. In addition, there are federal laws that must be taken into consideration whenever a non-federal employer works in an area that is under the control of the federal authorities. The coverage is definitely not one-size-fits-all.

Workers’ Compensation Coverage—Workers Compensation and Employers Liability

Part A covers all injuries and diseases that must be covered according to the individual state workers compensation statutes. All benefits are paid in accordance with the schedule provided by the states. Part B covers the liability that may be imposed beyond the state statutes subject to the exclusions and conditions of the policy. The National Council of Compensation Insurers provides a standard form that is a model for all member companies to use. Certain states have alternatives but all are fairly similar. Part A is mandatory and dictated by the states; however, Part B is more insurer-defined and should be compared by carrier, particularly the exclusions.

Automotive operations should always carry this coverage if they have any employees.

(Refer to ACORD 130) (Refer to PF&M Section 280.4-2)

Workers’ Compensation Coverage—Federal Employers’ Liability Act (FELA)

Covers not only those employees who actually work for the U.S. federal government, but also those who work for or on railroads that cross interstate lines and may not normally be subject to state workers compensation coverages. Coverage is provided by an endorsement to the workers compensation policy.

Automotive operations with contracts to operate on or near the railroads or who work on or near federal bases may need to consider this coverage.

(Refer to ACORD 130) (Refer to PF&M Section 280.6-14)

Workers’ Compensation Coverage—Longshore And Harbor Workers Coverage

Covers workers or maritime employees in positions such as longshoremen, harbor workers, shipbuilders, ship-breakers, ship repairers or other employees engaged in loading, unloading, repairing or building vessels. It also covers employees who work on navigable waters, adjoining piers, wharves, dry docks, terminals, building ways and marine railways. It does not cover masters, captains, or crews of vessels unless further endorsed to voluntarily cover those positions. Coverage is provided by an endorsement to the workers compensation policy. Automotive Operations that operate on the water, especially on navigable waters, such as rivers and oceans, may be required to purchase this coverage.

(Refer to PF&M Section 280.6-9)

Workers’ Compensation Coverage—Stop Gap Or Employers Liability Coverage

There are gaps between the workers compensation policy and the CGL which can leave an insured uncovered. In most states the carriers attempt to correct these by use of the employers liability coverage. However, in monopolistic states, the workers compensation carrier is the state so the CGL carrier is the one who attempts to fill the gap. Coverage may be offered as a stand- alone policy or as an endorsement to the CGL policy. There is no standard policy so comparisons should be made based on the limits offered, exclusions and limitations.

If the automotive operation is located in any of the monopolistic states they should purchase stop- gap liability. All other workers compensation policies should include the employers liability as Part B of the policy.

(Refer to ACORD 130) (Refer to PF&M Section 280.6-27)

Workers’ Compensation Coverage—Voluntary Compensation

Each state has a definition as to who must be covered and who is exempt under workers compensation. The employer then has the opportunity to include the exempt employees using the voluntary compensation endorsement.

Automotive operations should consider including all exempt employees by using this form in order to eliminate coverage gaps.

(Refer to PF&M Section 280.6-17)