Other States Insurance Under a Workers’ Compensation Policy

Other States Insurance is Part Three of the standard workers’ compensation and employers’ liability policy. It can extend statutory workers’ compensation coverage to certain states where an insured employer starts work after the policy begins, but only when the state is listed in Item 3.C and the policy’s conditions are met. States listed in Item 3.A are scheduled states where the policy is written to provide coverage from inception. Part Three is a limited policy mechanism, not automatic nationwide coverage. It does not replace checking each jurisdiction’s law, arranging required state-fund coverage, or obtaining special coverage for federal and maritime exposures.

The phrase “all states” on a quote, certificate, or conversation with a broker should never be treated as a complete coverage analysis. The information page, endorsements, employer’s actual operations, and local law determine the result. A company can have an employee traveling temporarily, establish a permanent worksite, hire a resident employee, or enter a state with an exclusive state fund; those situations can trigger different legal and insurance questions.

How the three state categories work

The standard policy Information Page separates states into Item 3.A and Item 3.C. Item 3.A identifies states where Part One statutory workers’ compensation insurance applies at the start of the policy, subject to its wording and applicable law. Employers should schedule states where they expect employees or operations, rather than treating this as clerical paperwork. The insurer uses this information to underwrite and rate the exposure, and state law can require an employer to obtain coverage before or when it begins operating.

Item 3.C lists states for the policy’s Other States Insurance feature. Under the representative standard policy wording reproduced in the Texas Department of Insurance Basic Manual, Part Three applies only if one or more states are shown in Item 3.C. If the employer begins work in one of those states after the policy effective date, and is not insured or self-insured for that work, the policy’s provisions apply as though the state were listed in Item 3.A. If the insurer is not permitted to pay benefits directly, the policy describes reimbursement to the employer for benefits required by that state’s workers’ compensation law.

The timing condition matters. The manual’s sample wording says that if the employer was already working in a state on the policy effective date and that state was not listed in Item 3.A, Part Three does not automatically solve the omission. The wording calls for notice to the insurer within 30 days after the policy effective date for coverage to apply. This is sample standard policy wording in TDI’s manual, not a substitute for checking the issued form, endorsements, policy dates, and state rules. Schedule known states before coverage starts and notify the carrier promptly when operations change.

A practical example: a new project after inception

Suppose a Texas contractor buys a policy effective January 1. Texas appears in Item 3.A, and Colorado appears in Item 3.C because the contractor might take a later project there. In April, the contractor accepts a short Colorado job. The employer should tell its agent and insurer before mobilizing, confirm that Colorado is properly handled, and determine whether any state filing or registration is required. If the wording and state law permit use of Part Three for a newly started operation, the policy may apply as if Colorado were scheduled in 3.A. The employer should obtain written confirmation; it should not assume the certificate alone changes the policy.

Now change one fact: the company already had Colorado employees on January 1, but failed to disclose them and Colorado was listed only in Item 3.C. Under the representative manual wording, after-acquired-state treatment is not designed for an existing operation simply omitted from 3.A. Notice deadlines and issued wording matter. A late discovery can lead to an uninsured exposure, a premium adjustment, or a dispute. Accurate applications and prompt updates prevent that avoidable problem.

An employee’s injury state is not the whole test

Workers’ compensation jurisdiction is determined under state law. An employee hurt while temporarily traveling may have a claim under the law of the state where the injury occurred, the employee’s home or hiring state, or another state with a sufficient connection. The answer depends on statutory jurisdiction rules and facts such as where the contract of hire was made, where employment is localized, where the employee regularly works, how long an assignment lasts, and whether the employee elects among available remedies. A policy’s state schedule addresses insurance; it does not by itself decide which state has jurisdiction over a claim.

Texas DWC materials describe extraterritorial coverage and jurisdiction questions in the Texas Act and Appeals Panel decisions. Texas Labor Code Chapter 406 also addresses the effect of benefits paid under another jurisdiction and elections of remedies. In some cases, benefits received from another state may be credited against Texas benefits rather than eliminating every Texas issue. These rules are detailed and fact-specific. The exam-level point is to separate the jurisdiction question (“which law applies?”) from the policy question (“where has the insurer agreed to provide coverage?”).

Why state-specific compliance still matters

States regulate workers’ compensation differently. They define covered employment and compensability, set benefit rules, impose reporting and notice duties, specify who must insure, and regulate policy forms and filings. Texas lets most private employers choose whether to subscribe, subject to exceptions and contracts. Many other jurisdictions generally require employers to secure workers’ compensation coverage. An employer expanding beyond Texas should not apply Texas’s subscription choice to a new state.

Some jurisdictions operate exclusive state insurance funds for ordinary workers’ compensation coverage. TDI’s Texas manual notes that Other States Insurance is not available where the applicable state fund is the sole permitted provider, or when the insurer elects not to write that state. Ohio’s Bureau of Workers’ Compensation administers a state insurance fund and offers state-specific employer programs; North Dakota Workforce Safety & Insurance is the state workers’ compensation agency; Washington Labor & Industries administers state-fund coverage; and Wyoming’s Department of Workforce Services administers workers’ compensation. These examples illustrate why a multistate business must check the current jurisdiction-specific process. They do not establish that every employer or every operation has identical eligibility.

Even where private insurance is available, an employer may need to register, post notices, report payroll, comply with cancellation rules, or obtain proof of coverage. A construction contract may impose requirements beyond the minimum statute. Some states recognize reciprocal agreements for employees temporarily working across borders; others may require the employer to secure coverage locally. Reciprocal arrangements can be limited by duration, employee type, or other conditions. Confirm reciprocity with both jurisdictions and the insurer instead of assuming it applies.

Exclusive state funds and employers’ liability gaps

An exclusive state fund may provide statutory workers’ compensation benefits but not the employers’ liability protection normally included in Part Two of a private-market policy. TDI’s manual warns that Other States Insurance is not provided in some circumstances involving monopolistic funds. The employer may need separate “stop-gap” employers’ liability insurance, often through an endorsement to a commercial general liability or workers’ compensation policy, depending on the state and carrier. Verify the exact product and exclusions: stop-gap coverage is not a replacement for the state fund’s statutory policy.

This is a classic coverage distinction. State-fund compliance answers whether the employer secured the statutory benefit system. Employers’ liability responds to certain covered legal damages owed by the employer for employee bodily injury. A certificate showing state-fund workers’ compensation does not prove that employers’ liability is included. Conversely, an employers’ liability endorsement does not establish that the employer met the state’s statutory insurance requirement.

Coverage Part Three does not cover every special exposure

The standard policy wording in TDI’s manual states that Part Three does not provide coverage under the Longshore and Harbor Workers’ Compensation Act. Federal statutes such as the Longshore Act and Jones Act, maritime obligations, and federal employment schemes can require separate endorsements or policies. The Texas manual also identifies FELA and admiralty exposures as needing separate treatment. A state schedule cannot turn state workers’ compensation insurance into a federal program or broaden a policy beyond its wording.

A logistics company, shipyard, staffing business, or contractor may have employees who cross state lines and may also perform work on navigable waters or under federal contracts. Those facts call for a coordinated review of statutory workers’ compensation, employers’ liability, federal endorsements, maritime liability, and contractual indemnity. Ask the insurer to identify which coverage part responds to each exposure and which exclusions or endorsements apply.

How to manage a multistate workforce

1. List each state where employees live, report, travel, or perform projects. Include remote workers and temporary assignments.
2. Identify states where operations already exist on the policy effective date, not only the headquarters state.
3. Ask the agent to schedule known states in Item 3.A and confirm appropriate Item 3.C states for contingent future operations.
4. Check whether each state allows private insurance, requires its own fund, permits self-insurance, or imposes a specific registration process.
5. Before hiring or starting a project in a new state, notify the insurer and verify written coverage and filing requirements.
6. Confirm special federal, maritime, and employers’ liability protection separately.
7. Keep payroll and job records by state and classification so the insurer can calculate premium accurately at audit.

This process belongs in hiring and project intake, not only at annual renewal. A new remote hire can establish a new state exposure even when the company never planned to open a physical office there. A short assignment may still trigger notice or coverage questions. Payroll reporting by jurisdiction also helps the insurer apply classifications and rates and gives the employer evidence of where work occurred.

Common exam traps

• Assuming Part Three applies in every state automatically; the standard provision requires a state to be listed in Item 3.C and conditions to be met.
• Confusing Item 3.A scheduled coverage with Item 3.C after-acquired-state protection.
• Assuming an employer can use 3.C for a state where it was already operating when the policy began; the representative TDI manual wording calls for timely notice and does not treat existing operations as a new state.
• Treating the policy state schedule as a decision about which state has legal jurisdiction over a claim.
• Assuming private insurance is available everywhere or that the same compliance steps apply in every state.
• Assuming a state fund automatically provides employers’ liability or federal and maritime benefits.
• Assuming a certificate overrides the issued policy, state law, or an endorsement.
• Forgetting to report a new remote employee or project location to the carrier.

Frequently asked questions

Does Other States Insurance mean I have coverage in all 50 states?

No. Part Three is conditional and state-specific. It generally requires the state to be listed in Item 3.C, the employer to begin work there after the policy effective date, and the employer not to have other insurance or self-insurance for that work. State funds, insurer restrictions, policy exclusions, and local law can change the answer.

What is the difference between Item 3.A and Item 3.C?

Item 3.A lists states scheduled for statutory coverage from policy inception. Item 3.C lists states that may qualify for the conditional Other States Insurance feature when operations begin after inception and policy conditions are satisfied.

What if an employee is injured in a state that is not listed?

Do not decide from the injury location alone. Report the claim promptly to the carrier and review the policy, state schedule, facts about the employment, and applicable jurisdiction rules. The insurer and state agencies can determine what law and coverage apply.

Does Part Three cover a Texas employer in a monopolistic state?

The standard policy manual warns that the provision does not apply where the state’s fund is the exclusive provider or the insurer does not write that state. The employer may need to secure statutory coverage directly from the state fund and arrange separate employers’ liability protection.

When should a company notify its insurer about a new state?

Before work starts whenever possible. The sample TDI manual provision includes a specific notice condition for existing operations omitted from Item 3.A, and the issued policy may contain other requirements. Early notice lets the carrier confirm the right schedule, premium, endorsements, and compliance steps.

Prepare for the Texas P&C exam

The Texas Property and Casualty exam course helps you distinguish scheduled workers’ compensation states, after-acquired-state provisions, and employers’ liability while studying how policy conditions interact with state law.