Frequently Asked Questions

December 22, 2016
Longshoreman Insurance and MEL

Question: What Is MEL (Maritime Employers Liability)?

Answer:
Maritime Employers Liability (MEL) was first written more than fifty years ago and is widely available in the market today, it remains one of the most mysterious of marine coverages-- falling somewhere between Ocean Marine Lines and Workers’ Compensation. What is MEL? MEL is coverage for an employer’s liability to its employees that would fall under Admiralty Law, roughly equivalent to Workers’ Compensation when someone is on a vessel. It can include Jones Act as well as General Maritime Law remedies including Maintenance & Cure, Unseaworthiness and Death on the High Seas Act.

MEL is NOT a compensation policy and does not cover any benefits available under Workers’ Compensation, Longshore & Harbor Workers Compensation Act, Outer Continental Shelf Lands Act or any other state or federal workers’ compensation system. Most MEL policies contain specific exclusions for all those, but some older policies did not contain these exclusions and are specifically endorsed to add them. Confused yet? In addition, MEL is not a replacement for a Protection and Indemnity (P&I) policy. A P&I policy offers not only coverage for employees, but also a large amount of third party bodily injury and property damage liability coverage not found in the MEL policy. Further, most MEL policies exclude the true “crew” of an employer on owned vessels. Those are the people specifically covered by most P&I policies. MEL is one of the most critical parts of many marine insurance programs and, if properly understood and placed, can provide essential coverage.

MEL covers two groups of workers:

1) Your employees on someone else’s vessels. Small or large, oil rig, yacht, barge, or cruise ship, you have a liability for your employees when placed aboard other vessels even though you are not the owner or operator of that vessel. In addition, most vessel/rig owners will require the employer to prove MEL coverage is in place under their contracts before allowing your employees aboard their vessels. Who does a MEL policy cover? AND it covers,

2) Employees who are temporarily on board one of your own vessels. For example, a marine construction company may have a full-time captain who is covered under their P&I policy, but also employ some land-based employees who work on board vessels part of their time. These land-based employees can be best covered under MEL. Unfortunately, the courts have held that certain employees who fall under the Longshore Act can also bring claims under Admiralty Law. Call our offices at
(844) 667-6640 to schedule a consultation. Also, you may email us at [email protected]

November 8, 2016

Question: Are there any exclusions to the Longshoreman Act?

Exclusions fall under the “Status” portion of the Longshoreman Act. “Status” has to do with an employee’s job. The term “employee” means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoreing operations, and any harbor-worker including

A ship repairman, shipbuilder, and ship-breaker, but such term does not include:

A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work:

B) individuals employed by a club (example is a yacht club), camp (think youth camp), recreational operation (jet skis, personal watercraft), restaurant, museum, or retail outlet;

C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of a marina (think direct employees of a marina)

D) individuals who are employed by suppliers, transporters, or vendors, are temporarily doing business on the premises of an employer described above and are not engaged in work normally performed by employees of that employer under this ACT.

E) aquaculture workers;

F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length; (Some individuals may be subject to coverage under a State Workers Compensation Law)

G) a master or member of a crew of a vessel;

H) any person engages by a master to load or unload or repair any small vessel under eighteen tons net;

IMPORTANT NOTE: (OWNERS CANNOT EXEMPT THEMSELVES UNDER THE LONGSHOREMAN ACT)

October 20, 2016

Are you familiar with the "Traveling Workmen Clause?"

This coverage is NOT site specific. It is good to have this coverage and sometimes can be obtained at no extra cost.

This is a critical coverage for Contractors and Sub-contractors or Ship Repairers. For your liability sake, please make sure that this is covered under your policy

Are you familiar with the "DISCOVERY PERIOD" on your Marine General Liability Policy?

Some policies will say something like: "Notwithstanding anything contained herein to the contrary, this Insurance shall not cover any liability in respect of loss or damage specified herein unless discovered and reported in writing to Underwriters within 12 months after policy expiration. This can be a very bad clause to have in your policy. Have your agent negotiate to remove this clause from your policy, or at least extend the discovery period to up to 60 months.

September 14, 2016

Do you know that there is no statute of limitations on a Longshoreman Claim?? The last employer who employs the employee pays the Longshoreman Claim. For this reason it is a very good reason to require
physicals for new employees.

August 23, 2016

Q: What about when I work on recreational vessels? Is that subject to the USL&H Act?

A: The answer is, "It depends!"

The USL&H Act 902 does exclude the following: "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..."

However, the Longshoreman Insurance Act includes individuals building recreational vessels 65' or longer or dismantling a recreational vessel when it is not in connection with the repair of that vessel.

And Work, such as repair or installation of equipment, on recreational vessels may be subject to the Longshoreman Insurance Act if the vessel is chartered with a skipper or crew on "more than an infrequent basis" or chartered as a bare boat with more than 12 passengers.

Q: I keep hearing about a "VENDOR" exclusion to the Longshoreman Insurance Act. What is the “vendor” exclusion stated in Subsection 902(3)(D) of the USL&H Act?

A:
Subsection 902(3)(D) of the Longshoreman Insurance Act (USL&H) states that a vendor’s employee is not subject to the USL&H Act if the employee is
1) is temporarily performing services on the premises of a maritime business;
2) is not engaged in work normally performed by employees of that maritime business; and (3) is covered by a state’s workers’ compensation program.

Update August 15, 2016

Do I REALLY NEED LONGSHOREMAN Insurance?

The following is a good article that takes one step-by-step through the process of 'Do I really need USL&H?

Click Here to read the article

Update July 14, 2016

Question: "I have a worker going to Europe working aboard a ship. Will my MEL coverage cover him in Europe?"

Our Answer:
The MEL coverage will not cover the worker in Europe once he steps off the ship. MEL only covers the worker while the ship is in navigation. An international coverage is required and is very affordable.

Question: "What is the definitive source of all my questions on Marine Insurance and Longshoreman Insurance.?"

Our Answer:
The definitive source is the US Dept. of Labor.

Please go to their site: http://www.oalj.dol.gov/

Publications

Also see this Blog on Marine and Longshoreman Insurance.

http://blog.longshoremaninsurance.com/wordpress/?p=15

Update July 12, 2016

Question: "I have a young company and would like to know what are my limits for 1099's who can operate under my umbrella and still be covered by all of my policies. I know you mentioned it is a certain percentage of payroll? I appreciate the clarification. I am in the process of adding another gentleman to my team...."

Our Answer:
(We assume that your 1099 worker does not have any liability or State Act Work Comp or Marine General Liability coverage in force on his own)
I. Your rates on Liability and Marine General Liability are based on your gross sales....no limits. You just pay according to how much business you do.
II. Same goes with State Act Workers Compensation (except the rates are based on Payroll) and for USLH (Longshoreman Insurance). You pay WC and USLH based on rates per $100 payroll. There are no limits other than your ability to pay.
III. Caution is urged in that you will be hit with a potentially huge audit billing if you do not notify the insurance companies as you move along growing your business of your increase and gross sales and payroll and have them adjust your sales for liability and payroll for WC and USLH.
IV. Call us to discuss at (844) 667-6640

Question: "What is the definitive source of all my questions on Marine Insurance and Longshoreman Insurance.?"

Our Answer:
The definitive source is the US Dept. of Labor.

Please go to their site:

http://www.oalj.dol.gov/

Publications

Also see this Blog on Marine and Longshoreman Insurance.

http://blog.longshoremaninsurance.com/wordpress/?p=15

Update July 5, 2016

Question: "My workers that are insured with your company are leaving today, headed to the UK. We will continue doing the same time work and the category or work that we are contracted to do has not changed. I have added new workers and I need to make sure that they are covered under my Longshoreman Insurance (USLH) and under my Marine General Liability Insurance and other coverages. Do you need the new worker's names for them to have coverage?"

Our Answer:
"No, we do not need your new worker's names at this time. Your company payroll will be included under your Longshoreman Insurance and under your General Liability sales, and we do not need individual names. He will be covered automatically. Have a good trip!"

Question: "Lately, has the USDOL (US Dept of Labor) increased or changed the penalties relating to ocean marine insurance and the requirements?"

ANSWER:
The U.S. Department of Labor has recently (2015) increased penalties and fines against marine employers and insurance carriers. Specifically, employers/carriers who fail to report first injuries or final payments are now facing an increased fine. Further, employers now face an increased penalty for discrimination.

Here is a quote from the U.S. Department of Labor (DOL): (click on the red links below for more information on each)

"To implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act), the Department of Labor) has published a department-wide interim final rule (IFR) adjusting its penalties for inflation. The IFR affects the following penalties assessed by the Office of Workers’ Compensation Programs (OWCP) under the Longshore and Harbor Workers’ Compensation Act (LHWCA):

Here is a quote from the U.S. Department of Labor (DOL): (click on the links below for more information on each)

20 CFR 702.204

Failure to file first report of injury or filing a false statement or misrepresentation in first report.

Increase from the current maximum of $11,000 to $22,587.

20 CFR 702.236

Failure to report termination of payments.

Increase from the current $110 to $275.

20 C.F.R. 702.271(a)(2)

Discrimination against employees who claim compensation or testify in a LHWCA proceeding.

Increase from the current minimum of $1,100 to a minimum of $2,259, and increase from the current maximum of $5,500 to a maximum of $11,293."

Update February 29, 2016

Question: How do I know if I need USL&H or Longshoreman Insurance?

Answer:
If your company has operations near or over the water, or in oil and gas exploration on the outer continental shelf of the United States, or overseas on US government contracts should be aware that you need Longshoreman Insurance. To follow is the law:

33 U.S.C. Section 904(a) – “Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under Sections 907, 908, and 909. In the case of an employer who is a subcontractor, only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation.”

33 U.S.C. Section 905(a) – “ … if an employer fails to secure payment of compensation as required by this Act, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under the Act or to maintain an action at law or in admiralty for damages on account of such injury or death. In such action the defendant may not plead as a defense that the injury was caused by the negligence of a fellow servant, or that the employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee.”

33 U.S.C. Section 938(a) – “Any employer required to secure the payment of compensation under this Act who fails to secure such compensation shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than one year, or by both such fine and imprisonment; and in any case where such employer is a corporation, the President, Secretary, and Treasurer thereof shall be also severally liable to such fine and imprisonment as herein provided for the failure of such corporation to secure the payment of compensation, and President, Secretary, and Treasurer shall be severally personally liable, jointly with such corporation, for any compensation or other benefit which may accrue under the said Act in respect to any injury which may occur to any employee of such corporation while it shall so fail to secure the payment of compensation as required by Section 932 of the Act.”

33 U.S.C. Section 932 – “Every employer shall secure the payment of compensation under this Act – By insuring and keeping insured the payment of such compensation with any stock company or mutual company or association, or with any other person or fund, while such person or fund is authorized (A) under the laws of the United States or of any State, to insure workers’ compensation, and (B) by the Secretary, to insure payment of compensation under this Act; or By furnishing satisfactory proof to the Secretary of his financial ability to pay such compensation and receiving an authorization from the Secretary to pay such compensation directly.”

The “employer” to whom these provisions apply is defined in the Act:

33 U.S.C. Section 902(4) – “The term ‘employer’ means an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel.”

Question: What happens if my company is supposed to have Longshoreman insurance and does not have it?

Answer:
There are potentially serious consequences under the provisions of the Longshore Act for these uninsured employers, and particularly for their corporate officers. The consequences include possible criminal prosecution as well as “joint and several liability.” “Joint and several liability” is defined as follows: “Joint and several liability is most relevant in tort claims, whereby a plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability. The rule is often applied in negligence cases, though it is sometimes invoked in other areas of law.”

Update February 25, 2016

Today we received this question from a prospective client. The client usually doesn't do much "marine type work." However, they have been asked to bid on a couple of jobs that do require Longshoreman Insurance or USL&H.

QUESTION: "Can you tell me how the Longshoreman Insurance works? Does it work instead of our W/C and Liability Insurance we have with our insurance carrier? Or is it in addition to this insurance? What types of accidents does it cover? Drowning, etc.?"

ANSWER:
Longshoreman Insurance is very similar to "State Act Worker's Compensation" in that the premium is based on a per $100 of payroll and class of work to be performed. Longshoreman Insurance provides benefits and pays claims for your worker's injuries or potential injuries. Whereas general liability insurance pays for injuries to anyone other than your workers. The cost of Longshoreman Insurance is more than the regular "State Act Worker's Compensation" so one wants to maintain very good payroll records, being careful to delineate who is working on what job. Is it a "marine" job, or is it a “regular” job? The coverage for Longshoreman insurance is very similar to "State Act Workers Compensation" in that it pays for medical bills, hospital stays, disability, time off work and most expenses related to any injury. However, the amount of recoverable monies from an USL&H incident or accident is much greater than that of the regular State Act Workers Compensation.