The Four-Month Buffalo Job and the Missing State
Lone Star Mechanical, Inc. is a Texas HVAC contractor with 38 employees and $3.2 million in payroll. Its workers compensation policy is written on the NCCI form with statutory Part One benefits and Part Two employers liability limits of $1,000,000/$1,000,000/$1,000,000. Item 3.A lists Texas, Oklahoma, Louisiana, Arkansas, and New Mexico. Item 3.C lists no states. In March, Lone Star sends a six-person crew to a hospital project in Buffalo, New York, for a scheduled four-month installation. The crew remains on Texas payroll and is supervised by a Texas project manager. In June, a crew member slips on a wet stairwell at the Buffalo site and suffers a traumatic brain injury. New York has a strict workers compensation statute, and the hospital owner demands proof that Lone Star's policy covers the claim. The policy has no other-states endorsement.
1. Does Part One of the Texas policy respond to the New York injury?
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No. The policy's coverage territory is defined by Item 3.A. New York is not listed, Item 3.C is blank, and no other-states endorsement is attached. The standard NCCI policy does not automatically extend Part One to a state where the employer has a sustained operation. A four-month hospital installation is not a brief temporary trip; it is an extended presence that underwriters would normally require to be listed. Because New York is outside the listed territory, Part One does not respond. New York will still treat the injury as compensable under its statute, so Lone Star faces an uninsured claim, possible penalties, and a tort suit by the injured worker.
2. What is the exposure under Part Two employers liability, and does the hospital owner's demand change anything?
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Part Two is also tied to the coverage territory. If New York is not covered, Part Two generally does not respond either. Even if Part Two were triggered, it would not pay workers compensation benefits; it pays damages for which the employer is legally liable. The hospital owner's demand for proof of coverage cannot be satisfied by the Texas policy because the policy does not insure the New York exposure. The CGL might respond to a third-party claim, but the CGL employer's liability exclusion would bar a claim by the employee. Lone Star therefore has a coverage gap that could be expensive and could jeopardize the hospital contract.
3. What should the agent have done before the crew traveled, and what should be done now?
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Before the crew traveled, the agent should have added New York to Item 3.A if the carrier writes there, or purchased a separate New York policy or an other-states endorsement. The agent should also verify New York-specific requirements, including the workers compensation board filing, disability benefits, and any waiver of subrogation the hospital contract requires. A certificate should reflect the New York coverage. Treating a four-month project as a temporary trip is risky; underwriters often require the state to be listed. Now the agent should notify the carrier immediately, determine whether any limited extension applies, and arrange New York coverage going forward. The injured worker's claim should be reported to the New York board and handled by counsel.