A

We believe that the endorsement may afford WC coverage for the insured for workers hired in another state. The endorsement bases coverage on certain conditions that have to be met, and these conditions are subject to more than one interpretation so we can see an insurer and an insured arguing over whether coverage is afforded.

First, we have to assume that the other state in which the workers are hired is not listed in Item 3.A of the information page as a site of operations. Now if a worker hired in another state is injured, the insurer says it will pay the WC benefits required under certain conditions. The first condition is if the injured employee was hired under a contract made in a state listed in Item 3.A. Under your scenario, the foreman hired the workers in the other state and the question is: does this mean that the contract of employment was made in that other state or does the fact that the contract was written in the Illinois home office mean the contract of employment was made in a state listed in Item 3.A? In our opinion, the phrase “a contract of employment made in a state listed in Item 3.A” can be interpreted in at least these two ways, with coverage dependent on the interpretation. An attorney familiar with Illinois contract law would probably be better able to answer the question of interpretation.

The second condition about the employee not claiming benefits in a state where the insured has other WC coverage is an attempt to make sure that an injured worker is not claiming benefits in the state where he was injured and in the state where the insured is domiciled, for example. The insurer wants to make sure that there is no double coverage for the injured worker. As long as the insured does not have WC coverage under a separate policy in the other state, or is not under a monopolistic state program, or is not a self-insurer, AND as long as the injured employee claims benefits only in Illinois, the second condition is met and the endorsement works.

The third condition is the easiest and your scenario seems to have met that condition. The work performed by the employee has to be temporary; that is, the worker is not a permanent employee.

In summary, under your scenario, if the workers hired in the other state are considered hired under a contract of employment made in Illinois, and if the injured worker claims benefits only based on Illinois compensation law, and if the work is temporary, then the WC coverage for your insured will extend to the workers hired in the other state. The coverage is confusing, conditional, and sometimes can be subject to interpretation and disputes, but the coverage is there.

Finally, the endorsement replaces the other states insurance clause of the WC policy and, in fact, does limit that coverage. Is this endorsement mandatory? If so, it curtails other states coverage and the insured should be aware of that; furthermore, the premium paid by the insured should reflect this curtailment of coverage.