Industry Insights and Articles
I CANNOT BELIEVE THAT MY GENERAL LIABILITY DOES NOT COVER ME WORKING AT THE DOCK OR WATERSIDE! Marine General Liability Insurance is a must for dockworkers and vessel repairs, in addition to USLH or Longshoreman Insurance.
An article by O. Rickey Harris ,CWCA, CMIP
LONGSHOREMANINSURANCE.COM IS YOUR “GO TO” INFORMATION
CENTER FOR MARINE, LONGSHORE AND ADMIRALTY INSURANCE SINCE
2007 AND THEY CAN BE REACHED VIA TEXT 24/7 AT THEIR LONGSHORE
INFODESK FOR QUESTIONS AND ANSWERS AT (205) 275-5005.
Liability Insurance such as the typical General Liability Insurance Policy is worded to take care of land-based operations because there is a little known EXCLUSION in most Commercial General Liability (CGL) policies for any work done around docks, piers, ships, etc. However, Marine General Liability (MGL) policies are designed to cover these marine type risks such as dock repair, dock building and ship repair or ship repairers coverage. Many long term insurance agents do not take the time to understand this EXCLUSION found in most CGL policies. That is why marine contractors should always work with an experienced marine insurance broker such as Longshoremaninsurance.com. Commercial General Liability policies usually cost less than marine general liability policies and most of the time the agent wants to win your account with the “cheapest” quote and you as a contractor want to spend the least amount possible for liability insurance, so this is perhaps the reason that you could end up with a policy that is no good to you or the third party that you furnished a certificate of insurance to. Many times, marinas and city and state government officials do not know the difference between commercial general liability insurance and marine general liability insurance.
They just see the certificate of insurance (COI) and it says “commercial general insurance” and they are like “fine, you have it. Come on it to work!” We have seen this several times.
Better check your own liability insurance policy wording to make sure that you have coverage if you are doing any work around docks, coastal or river areas, and especially around vessels of any size. Go first to the EXCLUSIONS page on your policy, which is usually located towards the end of your policy. An exclusion is a policy provision that eliminates coverage for some type of risk and narrow the scope of coverage found in the insuring agreement and are in favor of the insurance company and not the insured, such as yourself! Don’t just look at the certificate of insurance that you may have from your agent, where it has the block checked that says “liability insurance.” That wording will not tell you what you need to know.
Your questions can be answered by contacting us at [email protected] or by calling or texting (205) 221-5466. Email or text is the preferred method of contact. Instant Response Texting if in a hurry, (205) 275-5005.
Jones Act - Large Verdict
The US Justice Department stated today, April 5, 2017, that Furie Operating Alaska LLC has agreed to pay $10 million to satisfy a civil penalty brought against it by the U.S. Customs and Border Protection for violating the Jones Act, according to Acting US Attorney Bryan Schroder.
Furie is based in Anchorage, Alaska and works with exploration and production of natural gas and oil in Cook Inlet. The penalty stems from transporting the Spartan 151 jack-up drill rig from the Gulf of Mexico to Alaska in 2011 using a foreign flagged vessel without acquiring a waiver of the Jones Act from the Secretary of Homeland Security.
The Jones Act, passed in 1910, prohibits a foreign vessel from transporting merchandise between points in the United States.
A violation of the Jones Act may result in the assessment of a civil penalty equal to the value of the merchandise. A waiver may be obtained under certain circumstances.
There are 7 Very Important Reason that You May Be Paying Too Much for Your Longshoreman Insurance:
1. Experience Modifier Wrong-
We get a lot of questions from Longshoreman employers and Marine Insurance employers asking about how the premium is calculated and what is included in the payroll and what is not. The National Council on Compensation Insurance is the governing body that rules on what is included and what is to be excluded from payroll calculations and premium to be paid for workers compensation and for Longshoreman Insurance.
Items included in the calculations are as follows:
1. The expenses are incurred for the business of the Employer.
2. The amount of each employee's expense payments or allowances is shown separately in the records of the Employer.
3. The amount of each employee's expense reimbursement is a fair estimate of the actual expenses incurred by the employee in the conduct of his/her work.
Many Clients ask us about AUDITS, AND WHAT ARE THE RULES? To follow is an article that speaks to both State Act Workers Compensation and to Longshoreman Insurance. To follow is an article that came across my desk today, August 8, 2016.
Class Code Review:
What Exactly is Clerical? By: Jason Mickey Premium Audit Account Analyst
Clerical Misconceptions:
"In workers’ comp insurance generally, each business gets a single classification that applies to all employees. If certain employees qualify for a standard exception and that code doesn't include the exposure, then they can be separately rated. The clerical classification is one of these standard exceptions. “Subject to certain exceptions...it is the business of the insured...that is classified, not the separate employments, occupations or operations within the business.” -P.C.R.B. Workers Compensation Manual.
April 1, 2016 Edition
When the typical injuries are paper cuts and eye strain, it’s not exactly a risky exposure. Because of this, it carries one of the lowest rates and has strict requirements in order to qualify. The term “clerical” can have different meanings and interpretations. In workers comp the clerical classification is only used for an office clerk; which, as you know, is not the same as a retail, gas station, or garage clerk. Below are some job duties that are commonly perceived to be in the clerical office code but do not qualify*:
· Front Desk Clerk · Counter personnel · Auto Shop Service Writer/Estimator · Cashier (i.e. auto shop, retail, etc.) · Beauty Salon Attendant · Host/Hostess · Supervisors or Managers *Subject to minor variations in state rules.
Qualifying Clerical Rating bureaus have developed strict guidelines that auditors must adhere to when assigning the clerical office classification. In doing so the integrity of the code is maintained along with its low rating. So what does qualify as clerical? The two main aspects to focus on are where the employee works and what the employee’s duties are. Here are the general guidelines:
Where: Locations Included · Work area separated and distinguishable from all other work areas and hazards of the employer by floors, walls, partitions, counters, or other physical barriers.
What: Duties Included · Creation or maintenance of financial or other employer records, correspondence, computer programs, files · Data entry or word processing · Phone duties including sales by phone · Copy or fax machine operations (unless the insured is in the business of making copies or faxing for the public) · General office work similar in nature to the above Where: Locations Excluded · Work or service areas · Areas where inventory is located · Areas where products are displayed for sale · Areas to which the customer brings a product for payment What: Duties Excluded · Physical labor · Direct supervision of non-clerical employees not performed in an eligible site · Outside sales or outside representatives · Any work exposed to the operative hazards of the business such as a stock or tally clerk, which is necessary, incidental or related to any operation of the business other than a clerical office Interchange of Duties
In instances where clerical or drafting employees perform any other duties, the total payroll of such employees would be assigned to the highest rated classification representing any part of their work. We understand how complicated yet important the classification process can be. A misclassification can have a huge impact on the relationship with an insured. If there are ever any questions or concerns with classifications, payroll, or any other audit issues, feel free to contact your assigned premium audit analyst."
Premium & Payroll Rules
A. PREMIUM BASIS AND PAYROLL ALLOCATION
1. Premium Basis
Premium is calculated on the basis of the total payroll paid or payable by the Insured for services of individuals who could receive benefits for work-related injuries as provided by the policy.
2. Payroll
For our purposes, payroll means money or substitutes for money for work subject to the USL&H Act.
Payroll includes: Wages or salaries (including retroactive wages or salaries)Total cash received by an employee for commissions and draws against commissions.
What is Excluded Under the Premium and Payroll Calculations
Payroll EXCLUDES THE FOLLOWING ITEMS:
Tips or other gratuities received by employees
Payments by an Employer to group insurance or group pension plans for employees, other than those included by manual rules above.
Payments by an Employer into third-party trusts for the Davis-Bacon Act or a similar prevailing wage law, provided the pension trust is qualified under IRC Sections 401(a) and 501(a).
The value of special rewards for individual invention or discovery.
Dismissal or severance payments, except for time worked or vacation accrued.
Payments for active military duty.
Employee discounts on goods purchased from the employee's Employer.
Expense reimbursements to employees to the extent that an Employer's records confirm that the expense was incurred as a valid business expense. Reimbursed expenses and flat expense allowances (except for hand or handheld power tools) paid to employees may be excluded from the audit only if all three of the following conditions are met:
Note: When it can be verified that the employee was away from home overnight on the business of the Employer, but the Employer did not maintain verifiable receipts for incurred expenses, a reasonable expense allowance, limited to a maximum of $30 per day, is permitted.
9. Supper money for late work.
10. Work uniform allowances.
11. Sick pay paid to an employee by a third party, such as an Insured's group insurance carrier that is paying disability income benefits to a disabled employee.
12. Employer-provided perks such as the following are excluded:
a. Use of company-provided automobiles
b. Airplane flights
d. Incentive vacations (e.g., contest winners)
e. Discounts on property or services
f. Club memberships
g. Tickets to entertainment events
13. Employer contributions to employee benefit plans such as:
a. Employee savings plan
b. Retirement plans
c. Cafeteria plans (IRC 125)
These include contributions made by the Employer, at the Employer's expense, which are determined by the amount contributed by the employee.
Longshoreman Insurance and Workers Compensation Premium Modification Factors -
What about my premium modification factor (mod factor) being adjusted after my policy is in force? I live in the State of Tennessee and the insurance company went in an increased my premium modification factor after the longshoreman insurance policy had been in force for over 3 months and this has produced a billing of $49,000 additional premium.
We are happy to report that after speaking with the Tennessee Department of Insurance that the insurance company is clearly in the wrong. According to insurance regulations in the State of Tennessee, this is contrary to The State of Tennessee Department of Insurance Rules. If your agent or broker cannot or will not help you get this corrected, then please contact your insurance commissioner's office in the State of Tennessee and ask for their help in the matter. You should see a reduction of your mod factor back to the original factor. Workers compensation rules vary from state to state, and the best way to find out about your rules if to ask your state department of insurance. Knowledge of this rule has saved several companies thousands and thousands of premium dollars that would have wrongly gone to the pockets of the insurance company! Do not expect that all insurance companies will know all the rules of the states in which they operate. There are many reasons for this but do not accept at face value an increase in your premium modification factor.
Longshoreman Insurance and "Regular Workers' Compensation Insurance", in What Ways Are They Alike?
The way workers compensation rates are calculated and the way that Longshoreman Insurance rates are calculated are very similar. The premium estimate is based on estimated payroll and a certain rate per $100 payroll or remuneration. Remuneration includes wages or salaries, commissions, draws against commissions, bonuses, overtime pay (remove this from the payroll) pay for holidays and sickness periods; rental value of housing provided to an employee.
However, unlike workers compensation or what is called "State Act Workers Compensation," the owners of a company or the officers of a corporation cannot elect to exempt themselves from Longshoreman Insurance premiums in most cases.