A common mistake an employer can make is to buy workers compensation insurance in one state while having employees working and/or living in another state. This creates a liability exposure in which the policy you purchased may not have coverage for claims generated by these employees.
One reason for this potential gap in coverage is that an employee is entitled to select the jurisdiction they wish to file their claims based on these three basic principles:
1. An Employee is entitled to file a claim in the state their work is principally localized
2. An Employee is entitled to file a claim in the state where they were injured
3. An Employee is entitled to file a claim in the state where they live
In most cases, the state is the same for all three. For example: An employee’s job is principally localized in the state of Wisconsin, she lives in Wisconsin, and she was injured in Wisconsin. In this scenario, the injured worker’s only available recourse is to file her claim in Wisconsin.
However, consider this alternate example: An employee’s job is principally localized in Wisconsin, he lives in Illinois, and he was injured in Indiana. In this case, the employee could file his claims against the employer in any one of these three states. But, does your policy have coverage for all three states? Unless the policy you purchased specifically lists all three states, you may have a potential gap in your coverage.
If you do have employees crossing state lines, it is highly recommended that you take a second look at whether your policy has coverage for your potential exposure. Learn more in this whitepaper, or download a pdf here.