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Workers' Compensation Complicated by Out-of-State Coverage

Posted on in Workers' Compensation

Workers' Compensation Complicated by Out-of-State CoverageWhen purchasing workers’ compensation insurance, employers must specify which states that the policy covers. This is not a big issue for many employers because their employees all work and live in the same state. However, employers with workers based in multiple states may neglect to include all of the states in their policies. The error could be an oversight or an attempt to save money on the policy. Employers can be held liable for workers’ compensation when an employee is injured in a state that is not covered by the employer’s policy.

Recent Case

A U.S. district court recently ruled that an insurance company was not responsible for paying workers’ compensation benefits to the family of a truck driver who died in a vehicle accident while on the job. The driver worked as a subcontractor for an Iowa-based trucking company but was himself based in Illinois. He lived in Illinois, and all of his work assignments stayed within Illinois. When the company filed a workers’ compensation claim, the insurance company denied the claim because it said Iowa was the only state covered in the policy.

Policy Details

According to the case opinion, the trucking company made no mention of employees based outside of Iowa in its workers’ compensation policy and only mentioned Illinois as a state that its employees occasionally travel to. It was only after the fatal accident that the company requested expanded coverage for Illinois and admitted that a majority of its subcontractors work in Illinois. The company claimed that the Illinois truck driver should have been covered as part of the policy’s Residual Market Limited Other States Insurance Endorsement (LOSI). The LOSI says that the insurance company will compensate employees in states not covered by the policy as long as:

  • The employee is contracted with an employer based in a state covered in the policy;
  • The employee is not claiming benefits in a state in which the employer is required to purchase separate insurance; and
  • The employee’s work in that state is temporary.

The court agreed that the claim failed the second and third parts of the LOSI because of Illinois’ workers’ compensation requirements and the driver’s permanent residence in Illinois.


Employees can file their workers’ compensation claims in the state where:

  • They are employed;
  • They live; or
  • The injury occurred.

When given multiple options, employees often choose their state of residence for convenience. However, they must be certain that their employer’s insurance covers that state. If not, they may need to seek compensation directly from their employer. A McHenry County workers’ compensation attorney at Botto Gilbert Lancaster, PC, can help you in receiving benefits after your work-related injury. To schedule a free consultation, call 815-338-3838.



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