Monopolistic Worker's Compensation States: The Basics
Four States and two territories in the United States employ a unique worker’s compensation model known as a Monopolistic State Fund (the “Fund”). For employers doing business in North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the U. S. Virgin Islands there are a unique set of rules regarding worker’s compensation coverage. It is not only important to understand the Monopolistic State Fund policies and procedures for each individual state the employer is doing business in, it is also imperative to let your Agent know if your business employs workers in any of these states to be sure proper coverage is in place.
Understanding the Fund
The Fund is a government owned and operated fund set up to provide mandatory insurance service. In states that employ the Fund, employers must purchase their worker’s compensation coverage from the state fund, thus excluding private companies from competing for business. Worker’s compensation is handled by the state or a state sponsored agency and some of the state agencies are also responsible for handling the disputes thereof.
Employers Liability provides additional coverage for claims if an employer is held liable because their act endangered the safety of their employees. This coverage pays for related expenses and damages when an employer is sued for an employment related illness or injury, including third party claims. Typically, Employers Liability is included as Part 2 of a Worker’s Compensation Policy; however, states that employ the Fund lack employer’s liability coverage in their policies and must be obtained separately.
When a business is domiciled in a non-Fund operated state BUT has employees in a Fund operated state, a Stop Gap Endorsement will provide Employers Liability Coverage in a Fund state. If a business is domiciled in a Fund operated state, a Stop Gap Endorsement may be added to the General Liability policy.