ENDORSEMENTS WC & GL Ken Phillips CPCU, APA Director Travelers Premium Audit Outline WC Endorsements Concentrate on NCCI endorsements Will address some state specials Temporary Agencies/Employee Leasing GL Endorsements Concentrate on ISO Endorsements Will try to address only endorsements that affect auditable coverage USL & H/Jones Act Questions Definition Endorsements generally accomplish one of two purposes: extend or limit the coverage provided incorporate special provisions that affect the premium determination Endorsement may be attached to the policy when it is first issued Endorsement may be added at any time during the policy period 1
Definition When endorsements are added during the policy period, the auditor must take care to note the change in coverage or premium determination and audit accordingly. In addition, the auditor should always be alert for exposures that require an endorsement and notify the underwriting department if one is not attached to the policy. WC Endorsements WC Endorsements Who remembers how endorsements are made a part of the legal policy contract? (Other than by stapling them to the file) 2
WC Endorsements Who remembers how endorsements are made a part of the legal policy contract? 3.A. Workers Compensation States 3.B. Employers Liability Insurance 3.C. Other States Insurance 3.D. Endorsements & Schedules WC Endorsements WC Endorsements 3
Types of WC Endorsements STANDARD filed by the NCCI may not be changed by any carrier using that form in an NCCI state except as authorized in the Forms Manual ADVISORY recommended forms that any carrier may elect to use or not to use carriers must file advisory forms and may use them as printed, or change them to meet specific needs an insurer using advisory forms, whether changed or not, is responsible for obtaining approval from the proper insurance regulatory authority, if required Types of WC Endorsements MANUSCRIPT companies may also draft what are called manuscript endorsements when a standard or advisory form does not adequately meet the specific needs Effective 01 Apr 1996 12:00:01 The National Council on Compensation Insurance, Inc. no longer designates forms as Standard or Advisory. Some regulatory authorities, however, request NCCI to place a Standard designation on some forms to indicate their intention that such forms not be changed. Because some older forms still contain a designation as Standard or Advisory,. WC Endorsements We will only be discussing some of the more common endorsements; this listing is not allinclusive. 4
Aircraft Premium Endorsement This endorsement is used in conjunction with class code 7421, Aircraft or Helicopter Operation Code 7421 applies to an insured that owns or leases aircraft used for transportation of personnel in the conduct of the employer s business. Most states require that an additional premium charge be made for such an aircraft. The premium charged (code 9108 or 0088) is per passenger seat and is usually found in the rate pages. (Most states charge $100 per passenger seat.) To determine the number of passenger seats, include all such seats available for use, not just those actually used. (Total Seats Pilot & Co-Pilot Seats) Additional rules are in your states Basic Manual Aircraft Premium Endorsement Can you have an aircraft premium endorsement and no 7421 exposure? Yes it is possible if the pilot is leased Aircraft Premium Endorsement 5
Designated Workplaces Exclusion Endorsement Excludes coverage at locations designated in the endorsement when it is proper to do so under the workers compensation law. Examples of items that might be excluded: An office address A construction site Cover one loc in state and exclude all others (maybe all others are self insured) Excl work insured by another policy (wrap-up) Designated Workplaces Exclusion Endorsement The NCCI defines a wrap-up as a large construction, erection or demolition project for which policies have been issued by one or more carriers under the same management, to insure two or more legal entities that are working on the project. Contractor Controlled Insurance Program (CCIP) Excludes coverage for operations insured elsewhere under a CCIP. Owner Controlled Insurance Program (OCIP) Excludes coverage for operations insured elsewhere under an OCIP. Designated Workplaces Exclusion Endorsement 6
Employers Liability Coverage Endorsement This endorsement is an advisory endorsement Provides employers liability insurance in designated states as if they were 3.A states Provides employers liability coverage to insureds in monopolistic states The monopolistic state policies only provide WC coverage Monopolistic States (OH, ND, WY, WA) Employers Liability Coverage Endorsement Employers Liability Coverage Endorsement 7
Joint Venture As Insured Endorsement Used when the named insured in Item 1 of the Information Page is a joint venture If you are a member of the joint venture you are only provided idd coverage bt but only in your capacity as a employer of the joint ventures employees Joint Venture As Insured Endorsement Partners, Officers & Others Exclusion Endorsement Used to exclude Partners when covered by the state act (I.E. CT) and allowed to be excluded Used to exclude Officers when covered by the state act (most states) and allowed to be excluded d Used to exclude others as designated by the state act (I.E. MO family members to the third degree) 8
Partners, Officers & Others Exclusion Endorsement NCCI will allow documentation for exclusion such as: All Partners All Officers Except The President Some carriers/states require more detail such as: Tim Hudson Pres John Lackey VP CA, TX, & NY I know have other endorsements for this purpose Partners, Officers & Others Exclusion Endorsement Sole Proprietors, Partners, Officers & Others Coverage Endorsement Used to elect coverage for a sole proprietor when allowed by the state act Used to elect coverage for a partner when allowed by the state act Used to elect coverage for an officer when allowed by the state act (most states provide coverage for the officer automatically) 9
Sole Proprietors, Partners, Officers & Others Coverage Endorsement NCCI will allow documentation for inclusion such as: All Partners All Officers Except The President Some carriers/states require more detail such as: Tim Hudson Partner Curt Schilling Partner CA, TX, & NY I know have other endorsements for this purpose Sole Proprietors, Partners, Officers & Others Coverage Endorsement Voluntary Compensation and Employers Liability Coverage Endorsement Use the voluntary compensation endorsement to afford coverage for persons not generally covered by the state act (I.E. Clergy is excluded in most states a church could provide coverage for clergy using this endorsement) This endorsement doesn t make the employee of the insured subject to workers compensation, but states that the insurance carrier will pay amounts equal to the benefits that would have been required if the insured was subject to the workers compensation law. 10
Voluntary Compensation and Employers Liability Coverage Endorsement Other common uses: Provide coverage for farm/agricultural workers Provide coverage for domestics Provide coverage for benefits in a state where an employee might not be entitled to benefits (I.E. Domiciled Oversees) The name might imply that this provides coverage for volunteers. That is not true as coverage for volunteers is subject to the provisions of the state act. (This endorsement is used in some states for volunteers) Voluntary Compensation and Employers Liability Coverage Endorsement Voluntary Compensation and Employers Liability Coverage Endorsement 11
Waiver Of Our Right To Recover From Others Endorsement We have the right to recover our payments from anyone liable for an injury covered by this policy. We will waive that right to recover against the person or organization shown on the endorsement Premium charge based on percentage of premium. Some states allow a flat charge. There is a min premium charge made. Not allowed in MO and NJ Waiver Of Our Right To Recover From Others Endorsement Temporary Agencies & Employee Leasing (PEO) 12
Temporary Agencies & PEO s Probably the most complicated of the WC endorsement issues There are many approaches to insuring these risk and it varies by state The NCCI website has a special section for Temporaries & PEO s The instructions are provided there on a state by state basis Temporary Agencies & PEO s Temporary Agencies & PEO s (Guide to State Specific requirements) 13
Temporary Agencies & PEO s Temporary Agencies & PEO s Temporary Agencies & PEO s Definitions: Employee Leasing Providing some or all of a businesses employees through a contractual arrangement. The individuals provided are employees of the leasing company but work and are under the direction i and control of another business (client company.) The employee leasing company is often referred to a Professional Employer Organization (PEO.) Creates a co-employment relationship 14
Temporary Agencies & PEO s Definitions: Temporary Agencies Provides employees on a short term basis to another business. Master Control Policy (MCP) Many states use an approach where the leasing company will have a master policy. There will then be an associated policy for each client company. The client company policy will carry the client s mod, ARD, etc. Temporary Agencies & PEO s Definitions: While the client policies of the MCP provide coverage for the leased employees there may still be an exposure for direct employees of a client company. Often times the client company will keep some key employees and officers on their own payroll. The client company now needs a WC policy naming them as the named insured. Some states still issue a single policy for the leasing company and all clients are covered there. Creates issues as client loses mod. Alternate Employer Endorsement 15
MCP Endorsement Employee Leasing Client Endorsement Some states allow/require that the client company provide coverage for their own employees and leased employees Provides coverage to the insured (leasing contractor) for their workers leased to others when their client company fails to provide proof that the client company has workers compensation insurance Employee Leasing Client Endorsement 16
Employee Leasing Client Exclusion Endorsement Most states use the MCP philosophy and the leasing company provides coverage for the leased workers This endorsement is attached to the client companies WC policy to designate that workers compensation does not apply to workers leased from the labor contractors identified in the endorsement s schedule. Employee Leasing Client Exclusion Endorsement Labor Contractor Endorsement Provides coverage for workers leased from a labor contractor as if the labor contractor is an insured. (Attached to client company policy) The labor contractor must still provide workers The labor contractor must still provide workers compensation coverage for its employees leased to other clients and for its own employees not leased to others. 17
Labor Contractor Endorsement Labor Contractor Exclusion Endorsement This endorsement excludes workers compensation coverage for workers leased to client companies identified in the endorsement s schedule. (Attached to leasing companies policy) The endorsement also requires that the client company secure workers compensation coverage for workers leased from the labor contractor. Labor Contractor Exclusion Endorsement 18
PEO Extension Endorsement Provides coverage under the client policy for leased workers PEO Extension Endorsement PEO Exclusion Endorsement Endorsement added to PEO policy to exclude the leased workers Policy provides coverage for the PEO s direct (non leased) employees 19
PEO Exclusion Endorsement GL Endorsements General Liability Endorsements We will only be discussing some of the more common endorsements; this listing is not allinclusive. 20
Additional Insured - Vendors Affords primary Products Liability coverage over and above any coverage the vendor may already carry. Having a Vendor s Endorsement added to your Products Liability policy provides your vendor "additional insured" status on your policy and gives your vendor added confidence to sell and distribute your product without fear of having a claim adversely effect their General Liability coverage or premiums. Don t confuse Additional insureds with Named insureds Basis of premium is Gross Sales of the vendor named on the endorsement. Additional Insured - Vendors Exclusion Intercompany Products Suits Exclusion Eliminates coverage provided by Section IV.7 of the CGL Coverage Part, Separation of Insureds. When this endorsement is added to a policy, the premium auditor should exclude the intercompany sales from the Gross Sales exposure for the Products/Completed Operations only. This endorsement does not affect Premises/Operations exposure. 21
Exclusion Intercompany Products Suits Exclusion Exclusion Products/Completed Operations Hazard Eliminates coverage for the products and/or completed operations hazard automatically provided under the CGL Coverage Part. It isn t necessary to show the products/completed operations code and exposure on the audit. Does not affect premises/operations coverage. Exclusion Products/Completed Operations Hazard 22
Exclusion Of Specific Accident(s), Products, Work or Locations(s) Excludes coverage for bodily injury or property damage arising out of the specific accidents, products, work or locations described, and applies to claims-made policies only. Exposures for those areas being excluded on the endorsement should also be excluded from the premium audit. Exclusion Of Specific Accident(s), Products, Work or Locations(s) Foreign Sales Exclusion Endorsement Coverage territory as defined in the policy (Section V.4) includes the United States of America (including its territories and possessions), Puerto Rico and Canada. This basic coverage territory is expanded to provide worldwide coverage if injury or damage arises from: Goods or products that t are made or sold by the named insured in the basic coverage territory, The activities of a person whose home is in the basic coverage territory but is away on business for the named insured for a short time. 23
Foreign Sales Exclusion Endorsement With the above extended territory provisions, there is no longer any distinction between foreign and domestic sales. All sales should be considered for the basis of premium. Foreign Sales Exclusion Endorsement May be excluded when: Foreign Sales Exclusion endorsement is attached to the policy Description of Form: This endorsement limits the coverage territory of the basic CGL Policy, in order to prevent duplication of coverage and premium charges when the insured also has an "international policy" which covers the same exposures. USL&H/ Jones Act Coverage 24
Background Federal Act Department of Labor oversight WWW.DOL.GOV USL & H or Jones Act Coverage is not provided by the standard WC policy. This exposure must be endorsed on. Good Reference Materials PAAS APA Texts USL&H Enacted in 1927 Mandatory for employers with employees covered by the Act, unless authorized by the Department of Labor as a self-insured (33 USC 932(a)-(b). (b) Failure to secure coverage can result in substantial fines ($11,000 per day per occurrence) and imprisonment of the company s top officers 20 CFR 703.003(a)-(b) USL&H Who is covered? Workers engaged in maritime activities (status) on or adjacent to navigable waters (situs) (More on this later) Exclusions Clerical, secretarial, security, or data processing Club, camp, recreational operation, restaurant, museum, or retail outlet Marina employees who are not engaged in construction, replacement or expansion of marina. Suppliers, transporters, or vendors who are temporarily on the employer s premises Aquaculture workers Individuals who build, who repair, or dismantle any recreational vessel under 65 feet in length A master or crew member of a any vessel Persons engaged by a master to load or unload or repair any small vessel under 18 tons net 25
Definition of USL&H To qualify as USL&H, must pass the Situs and Status tests. Situs USL&H situs, by case law, includes construction of a structure in, on or over navigable water. Navigable water is a waterway used for interstate commerce. However, land-locked lakes have been found to be navigable water. The definition of navigable water is constantly evolving due to new cases. Definition of USL&H Status An employee must be engaged in maritime employment to be eligible for USL&H. However, due to case law, any construction employee can temporarily be subject to the Act. In essence, situs will drive eligibility with status considering work being performed at the time of injury. USL&H for Contractors For contractors, USL&H: will apply to construction workers on a barge or other floating work platform; will apply to workers on a boat going to a site or barge; may not apply to construction workers on a bridge structure because it is deemed to be an extension of the land. 26
Determining Existence of USL&H Exposure Status and Situs test are applied If the account owns, leases or rents a boat or barge, it s an indication of potential USL&H exposure Is any of the below work performed? Is any of the below work performed? Bridge Work Caisson or Cofferdam Construction Ships Captains Dredging/Divers Existence of these operations increases the chance there is a USL&H exposure. 27
Basic Manual Requirements Rule 2-G Interchange of Labor from the NCCI Workers Compensation Basic Manual fully defines the insured s record keeping requirements Class codes are identified as below: 7650F Freighthandling F classifications are preloaded for USL&H charge 3724U Millwright subject to USL&H U classifications base rate will be increased to reflect the USL&H charge 28
Longshore and Harbor Workers Compensation Act Coverage Endorsement Extensions To USL&H Act Defense Base Act Non-Appropriated Fund Instrumentalities Act Outer Continental Shelf Lands Act Defense Base Act The Defense Base Act makes the Longshore and Harbor Workers' Compensation Act apply to contractors performing work at overseas military bases, whether in a territory or possession of the United States or in a foreign country, and to various public works contracts performed outside the continental United States. Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Defense Base Act extension of the Longshore and Harbor Workers' Compensation Act. The description of the work must include the location where the work is to be performed. 29
Defense Base Act Non-Appropriated Fund Instrumentalities Act The Non-appropriated Fund Instrumentalities Act makes the Longshore and Harbor Workers' Compensation Act apply to civilian employees of certain instrumentalities such as the Army and Air Force Exchange Service, Army and Air Force Motion Picture Service, Navy Ship's Stores Ashore, Navy, Marine and Coast Guard Exchanges and other instrumentalities of the United States under jurisdiction of the Armed Forces conducted for the pleasure and improvement of Armed Forces personnel. Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Non-appropriated Fund Instrumentalities Act. Non-Appropriated Fund Instrumentalities Act 30
Outer Continental Shelf Lands Act The Outer Continental Shelf Lands Act makes the Longshore and Harbor Workers' Compensation Act apply to work involving the development from fixed platforms of the natural resources of the Outer Continental Shelf. Use this endorsement to provide workers compensation insurance and employers liability insurance for work on the Outer Continental Shelf subject to the Longshore and Harbor Workers' Compensation Act. The description of the work must show the state whose boundaries, if extended to the Outer Continental Shelf, would include the location of the work. Use the Maritime Exclusion Endorsement or Maritime Coverage Endorsement to exclude or cover the exposure for masters and members of the crews of vessels. Outer Continental Shelf Lands Act Longshore vs. Seaman USL&H vs. Jones Act Seaman Masters and Members of Crew 31
Maritime Coverage Endorsement Use this endorsement to afford maritime coverage under Program I or II, as described in the Basic Manual User's Guide in which the employer has maritime exposure and no Protection and Indemnity policy, or has a Protection and Indemnity policy that does not cover all its operations. Use Item 1 of the Schedule to describe the maritime operations that t are to be insured by this endorsement. The description may include limitations by size, ownership or name of vessel and limitations by names of waterways to be used by the vessels. Show a premium charge or other appropriate entry in Item 2 to provide coverage for transportation, wages, maintenance and cure. The premium charge for the exposure shall be determined by the carrier from its evaluation of the exposure presented by the risk. Maritime Coverage Endorsement QUESTIONS? 32