RULE II – EXPLANATION OF COVERAGES AND METHODS OF INSURING

1. Description of Workers Compensation Coverage
   Workers compensation insurance provides coverage for the statutory obligation of an employer to provide benefits for employees as required by:
   1. Workers compensation law or occupational disease law of any state or territory of the United States, including the District of Columbia, and
   2. United States Longshore and Harbor Workers’ Compensation Act.
2. Delaware workers compensation insurance may be provided only by the Standard Policy.
3. Longshore Coverage
   U.S. Longshore and Harbor Workers’ Compensation Act insurance may be provided only by attaching the Longshore and Harbor Workers’ Compensation Act Coverage Endorsement (WC 00 0106A) to the Standard Policy. Refer to Rule XII.
4. Deductible Coverage
   See Rule II – F.

1. Compulsory as to all employments:Specifically includes persons who are licensed under Title 30, Chapter 25 of the Delaware Code or persons shown to be conducting business in a manner in which they should be so licensed.Exceptions:
   1. Partners of a partnership or sole proprietors not licensed under Title 30, Chapter 25 of the Delaware Code or shown to be conducting business in a manner in which they should be so licensed.
   2. Farm labor; domestic servants, casual workers earning less than $750 in three months from one household. Elective as to state and certain counties, cities and towns. Refer to Title 19, Sections2307, 2308, 2309 and 2311 of the Delaware Workers Compensation Law.
2. No insurance carrier is permitted to issue policies which would create duplicate coverage for an employer.
3. No insurance carrier is permitted to issue policies which would insure separate parts of a single employer. (Exception see Rule III – B. 2.)
4. When an employer proposes to insure this accident and occupational disease compensation liability, such liability must be covered by a single policy of one insurance carrier.

1. Description of Employers Liability Insurance
   Employers’ liability insurance provides coverage for the legal obligation of an employer to pay damages because of bodily injury by accident or disease, including resulting death, sustained by an employee. Employers liability coverage applies only if the injury or death of an employee arises out of and in the course of employment and is sustained:
   
   1. In the United States of America, its territories or possessions, or Canada, or
   2. While temporarily outside the United States of America, its territories or possessions, or Canada, if the injured employee is a citizen or resident of the United States or Canada; but suits for damages and actions on judgments must be in or from a court of the United States, its territories or possessions or Canada.Unless specifically excluded, coverage for the liability of an employer under admiralty law and the Federal Employers Liability Act is provided by employers liability insurance.
2. Employers’ Liability for Diseases
   Employers liability insurance for diseases not covered by a workers compensation law or an occupational disease law is provided by the Standard Policy.
3. Admiralty Law or Federal Employers’ Liability Act
   Employers liability insurance for liability of an employer under admiralty law or Federal Employers Liability Act is not provided by the Standard Policy. Refer to Rule XII for rules and endorsements to cover or limit this exposure.
4. Employers Liability Insurance With Workers Compensation Insurance
   Employers liability insurance written with workers compensation insurance is provided by the Standard Policy.

1. Description of Voluntary Compensation Coverage
   Voluntary compensation insurance does not provide workers compensation coverage and is not available for employments subject to a workers’ compensation law. This insurance affords the benefit sof a designated compensation law as if the affected employees were subject to that law, even though the law does not require payment of benefits to such employees.Voluntary compensation insurance shall not provide compensation, medical or other benefits in excess of the statutory requirements in the workers compensation law designated in the standard Voluntary Compensation and Employers Liability Coverage Endorsement.
   
   
2. How Provided
   Voluntary Compensation insurance is provided by attaching the Standard Voluntary Compensation and Employers Liability Coverage Endorsement (WC 00 03 11A) to the Standard Policy. Refer to Rule VIII for rules and carrier rating values.

1. Description of Other States Coverage
   1. Employers liability insurance and, where permitted by law, workers compensation insurance are provided in other states not listed in Item 3-A of the Information Page by listing states where coverage is to be provided in Item 3-C of the Information Page.
   2. If workers compensation insurance does not apply because the insured or carrier is unable to take the necessary action to bring the insured under a workers compensation law, the carrier will reimburse the insured for all compensation and other benefits required of the insured under such law.
   3. Part Three – Part Three – Other States Insurance does not provide U.S. Longshore and Harbor Workers’ Compensation Act coverage. It may be afforded only in accordance with Section I, Rule XII.
2. States Where Not Available
   Other states coverage is not available in states:
   
   1. With a monopolistic state fund, or
   2. Where the carrier elects not to write this coverage.
3. Restriction on Use
   Coverage for operations known or expected to be performed in a state not listed in Item 3-A of the Information Page shall not be provided under Part Three – Other States Insurance.
   
4. Premium
   Premium developed for operations covered under Part Three – Other States Insurance shall be based on workers compensation rules and carrier rating values.

Volume 63, Chapter 250, Delaware Laws, requires that every insurer licensed to issue workers compensation and employers liability insurance by the Insurance Department pursuant to Title 18, Delaware Code, shall offer to write each such policy subject to a deductible applying only to medical reimbursement and death benefits. The insured employer shall be permitted to accept or reject such a deductible at the time the policy is issued or renewed. It is required that the following be completed by the employer indicating his election to accept or reject a deductible. The deductible options that, by law, must be offered and the corresponding premium credits are shown on the form below:

                                       NOTICE OF ELECTION TO ACCEPT OR REJECT AN INSURANCE DEDUCTIBLE  FOR DELAWARE WORKERS                                                                                                                                   COMPENSATION DEATH AND MEDICAL BENEFITS

Delaware Law permits an employer to buy workers compensation insurance with a deductible. The deductible is for death and medical benefits and applies to each accident. The deductibles available and the corresponding premium reductions are set forth in Section 2 of this manual:

You are not required to choose a deductible program. However, if you do so choose, it is to be understood that your insurance company will administer and pay all claims and that you will reimburse the insurance company for payments it makes within the amount of the deductible selected. Failure to reimburse the insurance company for such deductible amounts within 30 days can result in cancellation of coverage.

Please show whether or not you want the deductible by initialing the appropriate choice below.

_________Yes, I want a deductible of ________applied to death and medical benefits under the Delaware
Workers Compensation Law. I understand that the company shall pay the deductible amount and be
reimbursed by the employer shown below.

________   No, I do not want the deductible described in this Notice.

I understand that in accordance with 19 Del. C. §2372, I have the option of modifying the above deductible program choice at the time of renewal of my workers compensation insurance policy with the insurance company named below.

________                              ______________________________________________________________
Date                                    Employer

________________________________________________________________
Name

________________________________________________________________
Title

___________________________________________________________________________________
Insurance Company

The deductible credit applies to total premium after application of experience modification, if any. The dollar amount of the premium reduction resulting from application of the deductible credit is to be recorded in Item 4 of the Information Page under Code 9663.G. DELAWARE WORKERS COMPENSATION INSURANCE PLAN (WCIP)The Delaware Workers Compensation Insurance Plan is available in the state of Delaware when an e

The Delaware Workers Compensation Insurance Plan is available in the state of Delaware when an employer is unable to obtain workers compensation coverage in the voluntary market. For more information refer to the Delaware Workers Compensation Insurance Plan Handbook or contact the Delaware Compensation Rating Bureau, Inc.

1. Residual Market Surcharge
   Effective August 1, 1997, the surcharge program applies to all risks insured in the Plan, including risks for which the Plan applications were processed through Delaware and WCIP risks for which residual market applications were processed through another state.
   a. Premium surcharges will apply to risks insured under the Plan which qualify for experience rating and which produce experience modifications in excess of 1.000.
   b.  Applicable surcharges to subject risks will be expressed as a factor to be applied to standard premium and will be computed using the following formula:
   0.50 x (1.000 – risk credibility in the Experience Rating Plan
   c.  Surcharges so computed will be limited to a maximum factor computed by subtracting unity(1.000) from each risk’s experience modification factor.
   d. Surcharges will be computed and expressed to two decimal places