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Workers’ Compensation Protection  

Workers’ Compensation – Is Your Protection Package Adequate?

Is your business headquartered in one state, but occasionally conducts business operations in other neighboring states? Operating a business in the Delaware Valley inevitably leads to employees working, living, or traveling in Pennsylvania, New Jersey, and Delaware. One of many unique risks confronting businesses is how workers’ compensation coverage corresponds to multi-jurisdictional law in our region.

Let’s start with a common example: ABC Company, solely located in Pennsylvania, occasionally does work in New Jersey. One day, ABC Company has an employee who suffers a serious workplace injury in New Jersey.

The maximum amount of workers’ compensation benefit can vary significantly from state to state and depending on certain factors, the injured employee may qualify for benefits in Pennsylvania or New Jersey. Generally speaking, an employee may seek medical care and benefit payouts that will provide him or her with the best possible outcome, regardless of the employer’s wishes. Errors in structuring ABC Company’s workers’ compensation coverage could result in severe financial consequences for ABC Company’s owners.

Because injured employees may have a selection of workers’ compensation payouts, it is important for all employers to adequately protect themselves through a properly designed insurance policy. Jurisdictional coverage in workers’ compensation policies can be divided into two parts: 3A Primary State Coverage and 3C Other States Coverage.

3A – Primary State Coverage applies to the workers’ compensation law of the states listed in the policy. Coverage is afforded to the insured in all states that are listed after 3A.

3C – Other States Coverage is designed to temporarily cover the insured when operating or traveling through states that are not listed under 3A. It is important to note that “Other States” does not suggest coverage in all other states. Additionally, many exclusions exist and definitions must be adhered to under 3C for coverage to apply.

To further complicate the issue, 3A coverage cannot be given if the carrier is not licensed to conduct business in that state. Any employer that conducts business in multiple states would be wise to insure themselves through an insurance carrier licensed to provide coverage in all states in which they operate or run the risk of having to pay the claim yourself under the wrong set of circumstances.

Most businesses in the Delaware Valley inevitably have some exposure to more than one state. Is your insurance agent properly structuring your workers’ compensation policy to protect against this common practice? Is your company insured with a carrier that can provide adequate coverage and claims management in such an incident?

It is important that your insurance advisor thoroughly understand the intricacies that make up our regions insurance laws. If you have further questions about this issue, a representative from Arthur Hall Insurance would be happy to assist in reviewing your current situation and advise you accordingly.

You can find out more about us at www.arthurhall.com or by calling either our Pennsylvania office at 610-696-2394 or our Delaware office at 302-658-0100.