When Should a Foreign Workers’ Compensation Policy Be Purchased?
From time to time, I am asked by clients whether an Illinois based employee who is injured while working outside of the United States, is covered by the employer’s domestic workers’ compensation policy. Generally, injuries sustained by Illinois employees who are injured while temporarily working outside of the United States are entitled to workers’ compensation benefits pursuant to the Illinois Workers’ Compensation Act of Illinois and the domestic workers’ compensation insurance policy of the employee’s employer will cover this risk. However, there are situations when it is advisable to consider supplementing a domestic workers’ compensation policy with a foreign workers’ compensation policy. These are the circumstances under which a foreign workers’ compensation policy should be considered.
- When an employee travels abroad, a week or two at a time, the employer should rely on its domestic workers’ compensation policy. It does make sense to supplement this coverage with coverage with a foreign workers’ compensation policy if the employee’s travel abroad occurs on a frequent basis. Foreign workers’ compensation policies are offered by most standard carriers and is a relatively inexpensive policy, starting around $2,500.00 per year. This coverage fills any gaps the domestic policy might leave, most obviously endemic disease and repatriation.
- When an employee may be exposed to an endemic disease that is particular to a foreign country. The endemic disease coverage language of a foreign workers’ compensation policy establishes that coverage applies to injury or death arising out of an endemic disease even if the disease is not covered under the domestic workers’ compensation policy of the employee’s employer.
- When employers are desirous of repatriation expense coverage, which covers expenses over and above normal transportation costs when it is necessary to bring an injured, sick or deceased employee back to the United States. Some foreign workers’ compensation coverage endorsements impose a sub-limit on repatriation expense coverage; the adequacy of such sub-limits should be carefully evaluated. The transportation costs associated with repatriation can be enormous.
- When an employee is going to locate overseas for more than three months, the employee’s employer should consider purchasing a foreign workers’ compensation insurance policy. Under the foreign policy, the employee will be charged at a rate just like he or she would under the employer’s domestic workers’ compensation policy and the employee will be entitled to receive benefits in accord with the state of hire.
In simple terms, for employees who are working outside of the United States, a foreign workers’ compensation insurance policy should be considered. The coverage is relatively inexpensive and spending a small amount to protect against potentially unlimited liability is sound risk management.