Workers Compensation and Employers Liability
The workers compensation policy contains two distinct coverage parts plus supporting sections. Part One is statutory: it pays whatever benefits the workers compensation law of each listed state requires - medical, disability, death, and rehabilitation - with no dollar limit. Part Two is employers liability: it responds to tort suits by employees or their family members that fall outside the exclusive remedy of the workers compensation law.
Part One - Workers Compensation
States to which Part One applies are listed in Item 3.A of the information page. Premium is based on payroll by classification, subject to audit. Sole proprietors, partners, members of limited liability companies, and corporate officers are not automatically covered and must be included or excluded by endorsement. Benefits under federal statutes - FELA, the Jones Act, the Longshore and Harbor Workers' Compensation Act, and the Defense Base Act - are not provided by the standard policy and require specific endorsements.
Part Two - Employers Liability
The declarations show three limits: Each Accident, Disease - Each Employee, and Disease - Policy Limit. Part Two responds when the exclusive remedy does not bar the suit, for example a spouse's loss of consortium claim or a third-party-over action in which an injured worker sues a third party who then seeks contribution from the employer. It does not pay workers compensation obligations, and it excludes liability assumed under contract and punitive damages in most editions.
Part Three - Other States Insurance
Part Three covers states listed in Item 3.C where the insured begins operations during the policy period, applying that state's benefits as though the state had been listed in Part One. It does not apply to states already listed in Item 3.A, to states where the insured has other specific workers compensation insurance, or to monopolistic fund states such as North Dakota, Ohio, Washington, and Wyoming.
Worked example
An Ohio trucking company lists Ohio in Item 3.A and Indiana in Item 3.C. A driver is injured on a run into Indiana, where the company began operations after inception. Part One pays Indiana benefits as if Indiana were listed, because Part Three applies. The driver's spouse then sues for loss of consortium, a claim outside the exclusive remedy; that claim falls under Part Two and is subject to the Each Accident limit.
Traps
The dollar limits on the declarations belong to Part Two - Part One has none. The two disease limits are separate and must each be checked. A state listed in Part Three cannot be treated as a Part One state, and monopolistic states cannot be insured for Part One by a private carrier.