Does Your Insurance Policy Cover Employees During Employer-Paid Trips?

By Rebecca Batisto

Does Your Insurance Policy Cover Employees During Employer-Paid Trips?

How does your company reward employees for top-notch performance?

Many companies use travel incentives, such as trips to exotic locations, to motivate teams to meet or exceed goals throughout the year. The top performers, and often their significant others and families, earn spots on the coveted trip and spend time having fun, hob-knobbing with executives, and taking advantage of an all-inclusive trip.

For the companies to label these lavish excursions as “business trips,” there are usually a few business meetings and motivational speeches scheduled into the mix of fancy dinners, golf, spa services, and late-night imbibing.

Now, if you’re reading this because you’re worried about risks for your company, you might be feeling faint. After all, each of these events represents multiple opportunities for an employee to suffer an injury, and the company could be held responsible. Or could it? Let’s break it down.

Workers’ Compensation On The Road

As I mentioned in our recent blog post, a company’s workers’ compensation policy covers the employee while they’re traveling for business, but this is different.

Incentive trips present a different challenge, as there is more non-work time during these events. However, some group outings could still be seen as furthering the company’s goals and, therefore, might be considered “work time” to some employees. In other words, there are many gray areas for your coverage.

Further, some of these “exotic locations” are outside of the U.S., meaning that accidents could occur in another country. What’s your company’s exposure in that kind of scenario?

The Complexities Of Having Fun

Workers’ compensation coverage gets complicated when an employee sustains an injury while “engaging in activities not related to business.” And of course, that is the bulk of the travel award trip.

Insurance companies have become more conscious of separating the moments where employees are engaging in activities for their personal pleasure from those that are for the “company’s advancement” and, in those cases, not paying workers’ compensation claims. Courts have frequently ruled against covering injured employees if the injury is found to be separate from their job, i.e. earned during personal enjoyment.

In order to avoid any unnecessary exposure, talk to your insurance agent about the trip and be sure to discuss specific events that will be done as a group versus those that can be deemed voluntary.

Reciprocity And Out-Of-State Coverage

If the incentive travel is taking place within the U.S., the company’s workers’ compensation coverage will likely be sufficient. Take the extra step to alert your agent of the trip, as well as any complexities that warrant discussion. Agents will be able to check “reciprocity” coverage in the destination state and confirm coverage needs.

For the most part, an employee is covered by the laws in the state where they are injured. As an example, if an employee is based in Washington but gets hurt in Nevada, Nevada laws will apply. States can provide no reciprocity, meaning Nevada laws would apply in this example. Full reciprocity could also exist and would mean that Nevada recognizes Washington’s laws without limitation. Limited reciprocity lies somewhere in between, with states drawing exceptions based on several factors.

International Waters And Foreign Lands

Nearly all policies cover employees who travel outside of the country for a “temporary” assignment. While an incentive trip is clearly temporary, it is still prudent to check with your agent and share the travel plans for those involved.

After review, your agent may suggest a Foreign Voluntary Workers’ Compensation (FVWC) policy to fill in the gaps, but that is unlikely. Most policies refer to “state of hire” (the state where the employee is considered to work) and extend coverage for travel, even when the employee is abroad.

That said, international travel may pose challenges to your company’s processes and procedures for reporting the incident, so you may need to educate employees if your agent raises a flag.

Preparing For The Big Trip

Be sure to check with your insurance agent and be transparent about your upcoming incentive trip. The more your agent understands, the more they can tailor a solution for your specific needs.

Group travel insurance, FVWC, or another short-term coverage type may be suggested by your agent to ensure the company’s liability is reduced. It is the company’s responsibility to communicate the additional policy or differences in coverage to employees embarking on their incentive travel.

In most cases, your employees will be covered by your existing policy, but it doesn’t hurt to include your agent in the conversation - to be safe. Normandy Insurance can help you navigate the waters of employee travel and provide both clarity and coverage for your incentive trip! Call Us: 866-688-6442

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