If I hire out of state employees, are they covered by my business insurance?
This issue is extremely complicated and cannot be fully answered with a definitive yes or no in this article. It’s important to have a discussion with your commercial insurance broker prior to hiring an out of state employee. We discuss a variety of topics, but talk to your broker.
Since you have employees, workers compensation insurance is a good place to start.
If your business requires out of state travel and work, it’s important to talk with your licensed agent and carrier. Some policies and carriers have reciprocal coverage. However, some states may require you to secure worker’s compensation coverage in their state. In the event your employee resides and works in that state on a regular basis, you probably need to purchase coverage for that state. Anytime you are sending an employee(s) to work in a state for the first time, we suggest contacting the regulatory agency in that state as well as your agent or broker. If that state doesn’t recognize your coverage, you may be held responsible for all claim costs and penalties.
At the time of this writing, four states do not recognize private coverage for worker’s compensation. Those states are; North Dakota, Ohio, Washington and Wyoming. In the event your sending employees to any of those states, make sure to contact the regulatory agency far in advance to insure coverage is in place.
You may have an employee working in a multiple state area. Determining the correct state of jurisdiction may not be clear or easy. Contact your agent, your carrier, and all state agencies to determine how to insure coverage. Remember, the ultimate responsibility lays with you the employer to be compliant in the worker’s compensation coverage of its employees.
Once you determine the worker’s compensation coverage, determine the liability and property coverage in your package. Make sure there are no exclusions and discuss in detail with your licensed insurance professional the scope of work outside your state. It’s possible you will need different vehicle insurance and coverage if you are providing a vehicle. Are you warehousing product or equipment at the employee’s home or commercial location? Again, your commercial insurance broker is probably licensed or affiliated with carriers in these areas. Make sure you have discussion and understand the coverage as you grow with out of state employees.