Limits on Coverage with a New Jersey Assigned Risk Workers' Compensation Policy in New York State

The Appellate Division Third Department recently ruled on whether or not an employer who obtains a workers' compensation policy in New Jersey through the assigned risk pool has coverage under the New York State Workers' Compensation Law when a claim is made against the employer before the New York State Workers' Compensation Board. The case is Chumra v. T & J Painting Company, decided July 9, 2009. The state of New Jersey does not have the equivalent of the New York State Insurance Fund, as an insurer of last resort. Instead they have an assigned risk pool for employers who cannot otherwise find an insurance company willing to write a policy of workers' compensation insurance. In order to encourage insurance companies to voluntarily cover an employer in New Jersey, there are restrictions on the type of policy that a workers' compensation carrier can write when they gain an assured through the assigned risk pool. The restriction is that the carrier is prohibited from including an “all states endorsement” in the policy. This means that the policy they write through the assigned risk pool is limited to coverage under the New Jersey Workers' Compensation Law. The workers' compensation carrier cannot write the policy for the assured to fully cover the employer across the country, except in those states similar to Ohio that have a monopolistic state run workers' compensation insurer. The policies do contain a limited “all states endorsement” for limited coverage in other states so as to protect an assured if an employee is injured in another state on a business trip. In fact the policy lists four requirements in order for it to protect an assured in a jurisdiction other than New Jersey. Those requirements are: 1. The claimant must have been hired in New Jersey 2. At the time of the injury they must have been principally employed in New Jersey. 3. The employer must not have been required to have workers' compensation insurance in the other state where the injury occurred. 4. The work being performed in the other state must be temporary in nature. In the case before the New York State Workers' Compensation Board the Workers' Compensation Board only made a finding that the work being performed in New York State was temporary. No findings were made about the three other requirements to make the policy effective in New York State. Therefore, the court restored the matter to the Workers' Compensation Board to make findings of fact on the other three issues before finding that the policy protected the employer and made Travelers Insurance Company liable for the benefits the claimant was claiming. On remand if the Workers' Compensation Board finds that any one of the first three requirements are not met the claim will become the liability of either the Uninsured Employers Fund in New York or it could determine that there is no jurisdiction for the Workers' Compensation Board ( although this is unlikely because the injury occurred in New York State).

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