Property Casualty

Over the River and Through the Woods…

Joe Watts
Joe Watts
Property Casualty

It’s a busy time of year for travel…whether through the woods to Grandma’s house you go…or on a jet plane to another country to see family. And while I know this blog doesn’t apply to your average holiday travel, it did get me thinking about the many, many employees who travel all the year through for work.

Here’s a scenario I want you to think about. Let’s just say one of your employees travels outside the U.S. to Paris, France, for an extended work stay. December is one of the coldest months of the year there, and there’s always a chance for snow. The car your employee is riding in happens to slip a bit on the wet roads, is involved in an accident, and your employee is injured. What happens?

Well, the answer is simply this — if you have employees traveling outside the U.S. (or even working outside the U.S. as part of his/her job), you must provide coverage for workers’ injuries and lost time benefits. That coverage would be applicable in my scenario.

Most state workers’ compensation laws provide coverage for temporary extraterritorial travel.  This would allow U.S. domestic coverage to extend to employees outside of the U.S. on a short-term basis. Each state is different in the definition of extraterritorial and short term. If you’re wondering what those differences are, I encourage you to visit the State of Oregon’s Insurance Department website. This site contains a great list of each state’s position.

So what kind of coverage should you have? There are two policies to consider.  

  • Foreign Voluntary Workers’ Compensation added to U.S. Domestic Workers’ Compensation Policy — “Voluntary” is the operative word in Foreign Voluntary Workers’ Compensation. If an employer elects this coverage, it can be provided via policy endorsement to the U.S. Domestic Workers’ Compensation policy. Several items of note about this:
    • It’s specific to employees traveling out of the U.S. on a short-term basis.
    • Not all insurers can offer a Foreign Voluntary Workers’ Compensation endorsement. Coverage offered by U.S. domestic carriers often times will have a specific time limit (for example: 20 days) and most often is not 24/7 coverage.
    • Coverage for endemic disease and repatriation may not be included.
    • Losses are reportable to the National Council on Compensation Insurance (NCCI) or other state bureaus and will impact the experience modification factor.
    • Most likely, the U.S. domiciled carrier will adjudicate the claim in the U.S. and reimburse the named insured for any payments or services outside of the U.S. Thus, the named insured would be responsible for getting claim payment into a local economy. This can result in taxable situations or fines and penalties.
  • Foreign Voluntary Compensation or Employers Responsibility Coverage as part of a Foreign Package — A better and more comprehensive approach to risks associated with traveling employees is including coverage as part of a foreign package. Benefits for Foreign Voluntary Compensation under a foreign package will be based on the U.S. state of hire for U.S. nationals and country of origin for non-U.S. nationals. Employers Liability coverage is included. Here are some items of note about this coverage:
    • A foreign package includes Foreign Voluntary Compensation, Employers Liability, and travel accident coverages. This is an enhancement over U.S. Domestic Foreign Voluntary Workers’ Compensation endorsements and provides coverage for endemic disease, repatriation expenses, out-of-country medical expenses, and enhanced 24/7 employee assistance resources.
    • There are domicile-specific regulations in many countries that require compulsory Employers Liability. A foreign package or domestic Foreign Voluntary Workers’ Compensation endorsement doesn’t meet that requirement.
    • Claims for Foreign Voluntary Compensation are not reportable to the NCCI or other state bureaus and don’t have an impact on experience modification factor.
    • Many carriers offer Foreign Voluntary Compensation and Employers Liability as part of a foreign package on a primary basis except when the insured has other valid and collectible insurance for benefits or damages, or when an injured employee collects statutory benefits pursuant to any workers’ compensation law, Social Security plan, scheme, or fund whether private or state sponsored.

I would encourage you to ensure you consult with the policy form and underwriter as it pertains to the individual carrier’s application of insurance. It’s possible for Foreign Voluntary Compensation, as part of a foreign package, to pay primary outside of the U.S. for U.S. clients that have large deductibles or self-insured retention (SIR) (for example: paying within the deductible or SIR amount).

Please also feel free to reach out to me to discuss your situation and what kind of policy would work best for you and your international traveling employees. While you hope an employee is never injured or involved in an accident, it’s always important to live by the good ol’ saying, “Hope for the best; prepare for the worst.”

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