How Foreign Voluntary Workers Compensation Coverage Works

Companies that employ workers who travel outside the United States on business may need foreign voluntary workers' compensation (FVWC) coverage. This coverage pays benefits to workers who suffer occupational injuries while working in a foreign country.

Should your company purchase FVWC coverage? The answer depends on the types of workers you employ (whether they are U.S. citizens or foreign nationals), their travel destinations, and the length of time they spend outside the U.S.

State Workers' Comp and Extraterritorial Travel

To understand why foreign voluntary workers' compensation (FVWC) coverage might be something you need, it helps to understand where state workers' comp coverage falls short.

Most state workers' compensation laws provide short-term coverage for workers who travel outside the state or country temporarily. The coverage period for extraterritorial travel varies from state to state. One state might afford coverage for five consecutive days while another provides 90 days.

When Injuries Aren't Covered

Overseas activities can lead to injuries that aren't covered by a typical worker's compensation policy. Here are some reasons why injuries that occur outside the U.S. might not be covered.

Exceeded Time Restrictions

The employee's injury may have occurred after the maximum coverage period. If your state offers 90 days of coverage and you break your wrist 100 days into your overseas assignment, the injury likely won't be covered.

Disease Not Covered

A worker may become infected with a disease that is common in a foreign country but is not covered under the worker's compensation or occupational disease law in the worker's home state. An example of such an ailment is malaria—a mosquito-borne disease common in many parts of the world but uncommon in the U.S.

Evacuation Expenses

An employee may incur a serious injury or illness that requires them to be evacuated to the worker's home state for treatment. State workers' compensation laws may not cover emergency transportation costs.

Not a U.S. Hire

A worker may have been hired in a country other than the United States. State worker's compensation laws do not provide benefits to workers hired in other countries, in general.

Foreign Voluntary Workers Compensation Policy

You should consider purchasing an FVWC policy if you employ U.S. workers who regularly travel outside the country. You should also consider this coverage if you employ workers in foreign countries. In many respects, an FVWC policy resembles voluntary compensation coverage except that it applies specifically to workers traveling or working overseas.

Like the standard National Council on Compensation Insurance (NCCI) workers compensation policy, an FVWC policy includes both worker's compensation and the employer's liability coverages. It may cover any or all of the following three categories of workers.

U.S. Hires

These are U.S. employees hired in their home state. They may travel overseas on short-term business trips or work in another country for an extended period. Policies may refer to the U.S. hires as "ex-pats," "U.S. nationals," or some other term. If a U.S. hire is injured while working outside the U.S., he or she typically receives the worker's compensation benefits prescribed by law in the employee's state of hire. For example, a worker hired in Pennsylvania will receive the benefits afforded by Pennsylvania law.

Third Country Nationals (TCNs)

The group consists of workers other than the U.S. hires who are assigned to work in a country other than their country of hire. An example is a French national hired in France to work in Spain. TCNs are usually provided the benefits afforded by the country in which they were hired. An employee hired in France for an assignment in Spain will receive benefits provided by French law.

Local Nationals

Local nationals are workers hired in their home country and assigned there for work. An example is a Mexican national hired to work in Mexico. Like states in the U.S., many countries have a compulsory workers' compensation law. Consequently, local nationals should be insured under a policy purchased in their home country. For this reason, most FVWC policies do not extend workers' compensation coverage to local nationals. However, many do include these workers under employers' liability coverage.

Coverages Provided by FVWC Policies

FVWC policies include some unique coverages that aren't provided by state workers' compensation laws, making them a valuable asset for your employees if they encounter emergencies overseas.

Endemic Disease

An endemic disease is a disease that is common in a certain country or location but is not typically found in the worker's home state. An example of such a disease is leptospirosis—a bacterial disease common in warm climate areas with high rainfall amounts. If Antonia contracted leptospirosis during her business trip and incurred medical expenses for treatment, it's likely those expenses would be covered under her employer's FVWC insurance.

Repatriation

A worker who becomes sick or injured overseas may need to be transported immediately back to his or her home country for treatment. Repatriation covers the extra costs (over normal transportation costs) of returning the worker back home. Some policies provide this coverage to U.S. hires only. Others extend it to TCNs as well. Repatriation coverage is often subject to a limit, such as $25,000.

24-Hour Coverage

For workers on temporary travel (business trips), FVWC coverage should apply 24 hours a day. When coverage applies 24 hours a day, any injury a worker sustains during a business trip is usually considered work-related. If Antonia's employer had purchased FVWC insurance with 24-hour coverage, the injury she sustained outside the restaurant would have been covered. Round-the-clock coverage may apply to the U.S. hires only or to both U.S. hires and TCNs.

Employers Liability Coverage

Employer's liability insurance is typically included in an FVWC policy. It protects employers against lawsuits filed by covered employees (including local nationals) who are injured while working overseas.

Frequently Asked Questions (FAQs)