Your Friend-The Alternate Employer Endorsement
One of the most effective endorsements authored by the National Council on
Compensation Insurance (NCCI) is the alternate employer endorsement. This endorsement to the workers’ compensation policy is used to extend primary coverage to employees of the named insured while they are in temporary or special employment of another company. This endorsement recognizes the employer providing coverage and the client company as the alternate employer.
It might be best to jump right in here and read the verbiage of this endorsement:
Alternate Employer Endorsement – Issued February 15, 1989 WC 00 03 01 A
This endorsement applies only with respect to bodily injury to your employees while in the course of special or temporary employment by the alternate employer in the states named in Item 2 of the Schedule. Part One (Workers’ Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the alternate employer is insured. If an entry is shown in item 3 of the Schedule the insurance afforded by this endorsement applies only to work performed under the contract or at the project named in the Schedule.
Under Part One (workers’ compensation insurance) we will reimburse the alternate employer for the benefits required by the workers’ compensation law if we are not permitted to pay the benefits directly to the persons entitled to them.
The insurance afforded by this endorsement is not intended to satisfy the alternate employer’s duty to secure its obligations under the workers’ compensation law. We will not file evidence of this insurance on behalf of the alternate employer with any government agency.
We will not ask any other insurer of the alternate employer to share with us a loss covered by this endorsement.
Premium will be charged for your employees while in the course of special or temporary
employment by the alternate employer.
The policy may be cancelled according to its terms without sending notice to the alternate employer.
Part Four (Your duties if injury occurs) applies to you and the alternate employer.
The alternate employer will recognize our right to defend under Parts One and Two and
our rights to inspect under Part Six.
1. Alternate Employer Address
2. State of Special or Temporary Employment
3. Contract or Project
Source: Alternate Employer Endorsement, WC 00 03 01 A, National Council on Compensation Insurance, Effective February 15, 1989
It is understood that you, the policyholder, retain the rights of the policy – the most notable being the notification of cancellation, which applies to the carrier and first named insured, not to the alternate employer.
This endorsement clearly provides protection for all concerned: to you, the policy holder; to your client, the alternate employer; and to the employees of the alternate employer.
You may also notice that in paragraph 3, it specifies that the alternate employer may still have an obligation to provide staffing workers’ compensation – this is especially true if your client is a contractor. Be aware that your policy is not intended to provide coverage to uninsured subcontractors or employees just because they are included on the payroll of your client. This protection in itself is probably the most important reason why you should insist that your carrier schedule each and every client onto the policy with this endorsement. It will protect you from an unforeseen claim that could be filed by a casual laborer who has been hired by an uninsured subcontractor of one of your clients.
The duty to report employee injuries to the insurer is separate and distinct from any injury reporting requirement imposed by a state workers compensation law. The insured’s primary duty under the policy is to notify the insurer at once when an injury occurs that may be covered. While the consequences of the insured’s failure to give timely notice of the injury to the insurer are not spelled out in the policy, it could void coverage.
Following is an overview of other duties of the insured:
- Provide for immediate medical and other services required by the workers’ compensation law.
- Give the insurer or its agent the names and addresses of the injured persons and of witnesses, and other information pertinent to the case.
- Promptly give insurer all notices, demands and legal papers related to the injury, claim, proceeding or suit.
- Cooperate with the insurer and assist, as requested, in the investigation, settlement or defense of any claim, proceeding or suit.
- Do nothing after an injury that would interfere with the insurer’s right to recover from others.
- Do not voluntarily make payments, assume obligations or incur expenses, except at your own cost.
The alternate employer endorsement steers the way for exclusive remedy, providing a clear path of coverage for any given set of employees. It will allow you to demonstrate
to your client or prospect that they do/will have coverage provided by your master policy.
This endorsement applies only with respect to bodily injury to your employees while in the course of special or temporary employment by the alternate employer in the states named in Item 2 of the Schedule which guarantees peace of mind for you the policy holder, and your insurance carrier.
The ability to define the exposure, and limit it to those employees for whom premium is being remitted, is good risk management. This professional friend won’t let you down!
Robert G. Barrow may be reached at The Barrow Group, LLC
Toll free 800-874-4798