Industry Insights and Articles
What about the missing cargo ship, El Faro. Was it covered by Longshoreman Insurance or the Jones Act?
The seamen aboard El Faro were certainly covered by the USLH or Longshoreman and Harbor Workers Insurance program and also by the Jones Act. The Jones Act allows seamen to make claims and collect from their employers for the negligence of the shipowner, the captain, or fellow members of the crew. Certainly, marine plaintiff attorneys will use the Jones Act in their tort claims to the Court to the benefit of the family members who lost loved ones on El Faro. The Jones Act has been under attack from a lot of people and industry specialists for the past 6 months now. The Jones Act does make shipping between US Ports much more expensive, and it does increase the cost of our ships. What is the Jones Act and what does it do? The Jones Act is also known as the Merchant Marine Act of 1920 which is a federal law or statute that promotes and provides support for the shipping by the US or American Merchant Marines. It deals with coastal shipping and REQUIRES THAT ALL GOODS TRANSPORTED BY WATER BETWEEN US PORTS BE CARRIED ON US FLAGGED SHIPS. These ships have to be constructed in the United States and have to be OWNED BY U.S. CITIZENS and the crew has to be U.S. CITIZENS and U.S. Permanent Residents. It is called the Jones Act because it was introduced in 1920 by a US Senator with the last name of "Jones." Many argue that the Jones Act increases shipping cost so much that we should do away with it. Others say, "what about national security?" "National Security, you ask? "What does the Jones Act have to do with National Security?" A 2013 article in the "National Review" lays out clearly the reasons for keeping the Jones Act in force. The US Navy is one of the biggest supporters of the Jones Act. Since the Jones Act was passed in 1920, every president, defense department, and congress have been in favor of the Jones Act. During "Operations Enduring Freedom" and "Iraqi Freedom," US flagged ships carried 90% of our war goods to the war zone to Afghanistan and to Iraq. "Every job created in an American Shipyard spawns four jobs elsewhere in the US Economy. The Jones Act Fleet annually generates 500,000 jobs, contributes $100 billion in total economic output, and provides $29 billion in wages, according to a study by the PricewaterhouseCoopers for the Transportation Institute." So let me ask you, "in this time of problems with the US Economy and with the world looking as insecure as it does, do we really want our cargo and workers hauling goods from one US Port to another to be hauled by foreign workers who bear no allegiance to the US and who could be 'sleepers' or enemies of the United States? It makes sense to many to keep the Jones Act in place!
http://www.nationalreview.com/article/342214/why-we-need-jones-act-letters
What is the first thing to do when in order to find out the Marine insurance costs for a contract or a potential contract?
Most likely, your insurance agent will ask to see your MSA, also known as the Master Service Agreement. The MSA will be furnished to contractors showing what types of insurance will need to be purchased.
One of our most recent clients, a Marine Surveyor, had to have the following Marine Insurance coverages in order to secure his most recent contract:
1)Comprehensive General Liability, to include Marine Coverages and shall include “Action Over/Indemnity Buyback” (or similar) and “Products and Completed Operations Liability” provisions or endorsements. ;
2) Bumbershoot or Umbrella (excess coverage) of $10,000,000 coverage;
3) Workmen’s Compensation insurance in full compliance with all applicable State and Federal laws and regulations, with an alternate employer and borrowed servant endorsements in favor of the contracting company; its joint venturers, co-owners, co-lessees, and customers. Coverage also had to include the Longshore and Harbor Workers’ Compensation Act (USLH) and an Outer Continental Shelf Lands Act endorsement;
4)Employers’ and Maritime Employers’ Liability (MEL) insurance, with alternate employer and borrowed servant endorsements in favor of the contractor, its joint venturers, co-owners, co-lessees and customers, in the minimum limits of $1,000,000 per accident covering injury to or death of any employee, including, without limitation, Master and Crew coverage with respect to any vessels owned or chartered by Subcontractor in connection with its work for the contracting agency and also;
5)Automobile Liability insurance covering owned, non-owned, and hired automotive equipment with minimum limits of $1,000,000 combined single limit for bodily injury or property damage per accident.
6)Pollution Legal Liability insurance; and others coverages to include endorsements to cover Jones Act; In Rem; Blanket Waiver of Subrogation and Blanket additional insureds.
Typically, the cost of all these coverages can be financed with a 25% to 30% down payment and the balance to be paid in payments.
USL&H Update to save you some work comp and Longshoreman Insurance premium money perhaps -
Hey, if your business is like most businesses in today's economy, then pay attention. Is your payroll less than it was 12 months ago? Then here is how to save some money on your Longshoreman Insurance and on your State Act Work Comp. Go ahead and ask your agent to reduce your payroll according to your last quarter's payroll figures. Don't wait until the end of the year and wait for the insurance company to refund your money. Take your discount upfront!
However, on the other hand, if your payroll increases, and you have more business, be very careful to increase your payroll so that you will not receive a big bill at the end of the policy year when it comes to audit time. Call us at
(205) 221-5466 or email us at [email protected] if you wish to discuss this or any other recommendations.
May 1, 2013
A Minnesota Contractor calls and asks, "Do I need Longshoreman Insurance?"
"I have a business that is not in the water, but we are working in the dry spaces around the water, and we are working on a dam." My reply, "Yes, you need longshoreman insurance because you are working in and around navigable waters that flow to the ocean." He replies, "I have workers compensation, do I buy a USLH policy or what do I do?" I replied, "It is best to have your workers' compensation policy and your USLH or Longshoreman policy written with the same insurance company so as to avoid any potential conflicts in the event of a claim."
FLORIDA MARINE CONTRACTORS INSURANCE OR FLORIDA LONGSHOREMAN INSURANCE
Well, the data is in for the new Florida Marine Contractors code, which was started in 2007. The results are in and now available from NCCI. The data shows that there were 138 insureds in the State of Florida who the new code of 6006F, either in part or whole.
Not including related clerical, sales or other codes, these 128 insureds generated a bit over $23,000,000 in payroll classified under the new Florida Longshoreman Insurance code of 6006F. The average was around $168,000 in payroll per contractor or per insured. The average claim was $47, 354 and there were 81 claims under the new Florida Longshoreman Insurance Workers Compensation Code of 6006F.
Code 6006F (the "F" means federal)was new for 2006. So make sure your workers compensation or Longshoreman Insurance declarations page has the letter "F" attached to your code, or you do not have longshoreman insurance. Since the code is still so new, it will be a couple of years before the data on it is fully developed. We should be able to see clearly in a few years, given that the current state of the economy is such that the payroll in the class is much, much lower since the good old days of 2007! It will be interesting to see how these results develop as the years flow. If you need Florida Marine Contractors insurance or Longshoreman insurance, just email O R Harris at [email protected] or call the longshoremainsurance.com offices at (205) 221-5466 Good day and may the sun shine upon you and yours daily! www.longshoremaninsurance.com
Data provided courtesy of NCCI. For more details, please visit www.NCCI.com
December 15, 2015 update -
Longshoreman Insurance Rate Reduction - How do I reduce my premiums that I pay into my Longshoreman Insurance?
Recently, we were able to help a client of ours take his USL&H rate down from $17.76 per $100 payroll down to $7.36 per $100 payroll. We did this by using a large deductible of $250,000. While this only works for a larger account, we can help you with other ways to save money on your USLH and State Act Workers Compensation.
Washington State Longshoreman Insurance-September 22, 2010
Longshoreman Insurance in Washington State - How is longshoreman insurance different in Washington State? For one thing, Washington State's Workers Compensation Insurance is sold only by the State of Washington in what is called a monopolistic workers compensation distribution system. (meaning that only the State can sell workers compensation and all insurance companies are blocked legally by the State from selling workers compensation insurance). No insurance company can sell workers compensation in the State of Washington. It can only be sold by the State of Washington. This Fall, the Fall of 2010 the voters in the State of Washington will vote on whether or not to allow insurance companies to sell workers compensation insurance in the State of Washington. Should the voters vote to allow insurance companies to sell workers compensation in the State of Washington, then most likely business owners in the State of Washington will see a potentially dramatic drop in the price of workers compensation. West Virginia recently opened up their monopolistic workers compensation system to competition and the premiums fell by 30% on the average and the business owners and citizens also enjoyed better service and treatment than they had before the change.
Typically, the rates for longshoreman insurance for welders working on ships in the State of Washington can expect a rate of around 19% to 20% for USL&H insurance. In addition to this, the business owner has to purchase State Act Workers Compensation Insurance. Should you have questions about Longshoreman Insurance in The State of Washington or any other state of the United States, call (205) 275-5005 and speak to O. Rickey Harris who is an insurance veteran with over 30 years experience in the field. His email is [email protected] and the office phone number is
(205) 221-5466 in Alabama.
California Longshoreman Insurance
Just recently, a potential client call us from California. He was going to work at a ship building site doing one week's work of asphalt repaving and repairs to the roads at the port. He had bid $23,199 for the job and found out that his insurance could cost 75% of the bid! He called too late to adjust his bid. We gave him some suggestions on how to better save money on the USL&H insurance he was required to have.
We work with staffing agencies who need Longshoreman Insurance or USL&H insurance for their clients.
We will be adding articles of interest in Longshoreman Insurance, The Jones Act and USL&H requirements from time to time in this section of our website. If you have any questions, please email us at [email protected] or call our offices at (205) 221-5466 We will be glad to answer any questions you may have.
Longshoreman Insurance and Kemper Insurance Companies -
Is Kemper Insurance headed for insolvency? Kemper Insurance wrote a lot of Longshoreman Insurance coverage in California for California employers. Which raises the question: What do I do as an employer if I have a Longshore Act claim with Kemper Insurance in California?
If this is you, the first thing you have to realize is the rules are murky in this area. In other words, there doesn't appear to be a whole lot of guidance. However, here is some insight.
WHO HAS TO PAY THE CLAIM IF THE CALIFORNIA LONGSHOREMAN INSURANCE COMPANY GOES BANKRUPT?
Under Section 904 of the LHWCA, the employer has primary responsibility for meeting it's obligation under the Longshoreman Insurance Act. Here, the employer is required to either self-insure/ self-fund or have insurance to cover Longshore Act claims. If the employer has US L&H insurance, payments by the carrier satisfy the employer's obligation. If the US L&H insurance carrier becomes insolvent and is unable to pay claims, the employer has primary responsibility to pay the benefits.
WHAT ABOUT THE U.S. DEPARTMENT OF LABOR SPECIAL FUND?
A Special Fund was created, under the Longshore Act, to deal with claims for second injuries. The Special Fund was created to encourage employers to hire workers who had previous injuries or work impairments. In essence, the U.S. DOL assesses carriers and self-insured employers on the basis of claim payments.
Some folks contend the U.S. DOL Special Fund will kick-in, so to speak, in the event the Longshoreman Insurance carriers are insolvent, and the employer is insolvent or is at risk of becoming insolvent. However, there is no guarantee that this can and will occur. This is part of the murky area of the law.
WHAT IS THE PROPER PROCEDURE TO MAKE A CLAIM IF KEMPER OR ANY LONGSHOREMAN INSURANCE COMPANY GOES BANKRUPT?
Here is a quick overview of the procedure which must be followed pursuant to Section 918 of the Act:
(1) You will need to obtain an award of compensation. You will have to go to court to get this award.
(2) The employer/ carrier has to be in default in payment for over 30 days.
(3) Within one year after such default, you have to make application to the deputy commissioner making the compensation order or for a supplementary order declaring the amount of the default.
(4) After investigation, notice, and hearing, as provided in Section 919, the deputy commissioner shall make a supplementary order, declaring the amount of the default, which shall be filed in the same manner as the compensation order.
(5) File a certified copy of such supplementary order with the clerk of the Federal district court for the judicial district in which the employer has his principal place of business or maintains an office, or for the judicial district in which the injury occurred.
(6) Such supplementary order of the deputy commissioner shall be final, and the court shall upon the filing of the copy enter judgment for the amount declared in default by the supplementary order if such supplementary order is in accordance with law.
(7) The review of the judgment entered is the same as civil suits for damages.
(8) Final proceedings to execute the judgment may be had by writ of execution in the form used by the court in suits at common law in actions of assumpsit.
WHO CAN GET TO THE MONEY THE QUICKEST?
If your employer is still in business, then enforcing the judgment against your employer is the "fastest way" to getting your LHWCA workers compensation benefits. However, you need to realize it may be a race to see who can enforce their judgment against employer first. These claims may put the employer out of business.
If you, the Claimant, are unable to satisfy the judgment due to the carrier's and employer's insolvency, the Secretary of Labor has the discretion to make payment from the Special Fund. This is more murkiness.
The foregoing procedure could take years and years. Hence, the quagmire. Longshoreman Insurance.com can be reached at (205) 221-5466 or email [email protected]
DISCLAIMER: This article is not legal advice. I have been simplistic in order to achieve clarity. You are expressly advised to seek competent legal counsel if you have a US L&H claim with Kemper Insurance Company or any other insolvent US L&H carrier in California. Remember, always tell the truth when you are making a claim for compensation. Your credibility is always at issue.
BREAKING NEWS
Longshoreman Update-Longshoreman Reform 2009-
LONGSHORE ACT, SECTION 803
(F) individuals employed to build any recreational vessel under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel;
The long awaited amendment of the Longshore Act became law on February 17, 2009 as part of the American Recovery and Reinvestment Act with President Obama's signature. The change in the wording of the ACT is shown below.
So who will this effect, and how will it work?
It will have NO effect on:
-Boat manufacturers
-Repairers of commercial vessels of any length.
-Marine Contractors, dock builders, dredgers, etc.
-Those who do not carry State Act Worker's Compensation.
So who will benefit?
-A group of employers who repair recreational vessels over 65 feet. They will move their exposure from
Longshore to State act immediately.
Issues: