Other FAQ Questions
1. What are the penalties for not having USL&H or Longshoreman Insurance when I should have it? See this link below from the US Dept. of Labor:
http://www.dol.gov/owcp/dlhwc/lhwca.htm#938
I will copy and paste it below.
§ 938. Penalty for failure to secure payment of compensation
(a) Failure to secure payment of compensation. 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 or imprisonment as herein provided for the failure of such corporation to secure the payment of compensation; and such 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 32 of this Act [33 USC § 932].
(b) Avoiding payment of compensation. Any employer who knowingly transfers, sells, encumbers, assigns, or in any manner disposes of, conceals, secretes, or destroys any property belonging to such employer, after one of his employees has been injured within the purview of this Act, and with intent to avoid the payment of compensation under this Act to such employee or his dependents, 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 penalty of imprisonment as well as jointly liable with such corporation for such fine.
(c) Effect on other liability of employer. This section shall not affect any other liability of the employer under this Act.[Back to Top]
See the entire Department of Labor page link here:
http://www.dol.gov/owcp/dlhwc/lhwca.htm#938
2. Is there a longshoreman insurance for a short job somewhere ? Not to my knowledge. All policies are issued on an annualized basis, and you are looking at a minimum premium of around $15,000 to $20,000 USD per year.
We sometime suggest that the 1-2 man operation look around for a "big brother" type relationship with a larger contractor in order to come under the large contractor's USLH or Longshoreman Insurance and split the job with that company. We realize that this may be hard or even impossible. However, make sure that there is enough profit and business there for you to pay $20,000 in insurance costs for your work!
3. Does the longshoreman requirements apply for foreign Country workers too which are coming over to do a warranty repair on a boat? Yes, if the foreign workers are working in or around US waters. Also, a US Company working in other countries may fall under the USLH law even though the company is working abroad.
The outlook for 2015 appears to be very positive as it appears that more work is becoming available. With the deal reached with the San Francisco Dock Workers, everyone on the West Coast of the US should see more demand for work and more demand for USLH insurance.
General questions for 2014:
Most all of our questions come from the smaller operators who "stumble" into the USHL work and want to know if they need insurance or what the minimum premiums are.
Question for December 2013:
One potential client called in because he is building a recreational boat 85 feet long. He wanted to know if he needed to purchase USL&H. He thought that USL&H was a requirement of a particular State and not a federal law. The answer was, "Yes, you need to purchase USL&H insurance if the recreational boat you are buying is over 65 feet in length."
Questions for July 8, 2011
This week, we received a couple of questions concerning USL&H (USLH) and Jones Act coverage in international waters.
The first one asked the following question:
"I am going to Brazil to operate a dredge in Brazil. Do I need Longshoreman Insurance?" I answered that most likely you do not need USL&H or Longshoreman Insurance because you will be operating outside the waters of the United States of America and the first two letters of USLH are "US," meaning United States and not Brazil. However, there could conceivably be a need for USL&H in this case under certain very strict conditions.
The second question is more complicated. In this case, we have an Asian company that is recruiting non-US citizens to work on an oil platform off the Coast of Africa. The contracting company is a US Company and the company is requiring the contractor to purchase USL&H and Jones Act Coverage. However, there will be no coverage under each policy unless it somehow involved a worker doing work in US waters. BUT the company IS REQUIRED to purchase the coverage in order to bid the job....a "Catch-22" situation if I have ever seen one!
We are still working on this one....
Questions for March 24, 2011
The following questions were asked this week about Longshoreman Insurance. These questions come from a California contractor who was unable to get any information from his broker because the broker was not very experienced in matters of Ocean Marine Insurance or Longshoreman Insurance.
"Our services include the sampling and measurement of liquid petroleum products in tanks, ships and barges. Normally the ships and barges are docked or in a harbor where we can take a tug out to.
My understanding is that USL&H covers employees working along the shoreline and in around the harbors. We may have a job that is coming up that will be in domestic waters (14 nautical miles) but not along the shoreline.
1. Will USL&H cover my employee who has taken a third party tug out to a client's ship to sample and measure that is say 5-10 nautical miles out?
2. If not, what is the USL&H defined shoreline?
3. And lastly, what if the ship is out in international waters? (15-20 nautical miles)"And here are the answers provided:
USL&H will cover the employees working along the shoreline, as long as a vessel is docked/moored. USL&H will not cover a Master or Member of a crew, but the distinction can be tough to distinguish.
If it is moving, it should be covered by USL&H, however, since you cannot dictate where a claim is file, it needs to carry MEL, at least for defense purposes (to move the claim back to the proper jurisdiction (court). When they go out 5-10 miles, I still believe in the end they would be covered by USL&H. Typically, a person needs to spend 20-30% of their time in service to a vessel to be qualified as a Jones Act seaman. It doesn’t sound like that is the case in your situation. However, if a claim is filed for jones act benefits, it will take $20,000-$30,000 in legal fees to get it to the correct jurisdiction.
Regarding work out of US waters, 15-20 miles out, I still think this is going to be covered by USL&H. Court cases have held the insured cannot sail in and out of coverage by crossing into and out of international waters to avoid longshore coverage. Courts have stretched longshore coverage to reach the high seas when sailing directly between two ports. However, my domestic wc carriers can only offer domestic MEL. It does not extend into international waters. An international MEL policy would be needed for any coverage outside territorial waters.
Sometimes there are no clear cut answers. It pays to ask these type questions of your insurance broker. Get it in writing from your broker.
Here is another question:
Does it matter how deep the water is? Answer: it only matters if the water is not landlocked and it can get you to the ocean or is navigable waters. There are other requirements whereby one would need USL&H or Longshoreman Insurance and be miles from the water!
What is the difference between MEL Insurance and Jones Act Coverage? What is the difference between MEL Insurance and Jones Act Coverage?
MEL Insurance Coverage
If your employees find themselves on a vessel operated by another company, Maritime Employers Liability Insurance should be a consideration.
Once a vessel has left the dock and is under its own power, state Workers' Compensation does not cover you and USL&H coverage will not be enough to cover your employees.
Employers that should consider Maritime Employers Liability Insurance if your company is involved with supplying equipment or making repairs to other companies' vessels.
If you are leasing the vessel, then you will need MEL coverage and not Jones Act.
What is the difference between MEL Coverage and Jones Act Coverage?
The Jones Act covers employees onboard vessels owned, leased or operated by your company, while MEL covers incidents that may occur while an employee is working on a vessel owned and operated by another party.
So one can see that it boils down to this, if you own the vessels, then Jones Act Coverage is needed and if you do not then MEL Insurance is needed.
1) Is an employee who delivers food to a cruise ship but does not go on board covered, or do I have to purchase Longshoreman Insurance for this employee?
NO. Employees temporarily doing business on the premises of a maritime employer, but who are not engaged in work normally performed by the employees of the maritime employer, are not covered under the Act.
2) Employees engage in diesel engine repair on recreational powerboats. The repair work is either done in the shop or on the boat. About 80% of the boats worked on are under 65 feet in length. Is coverage needed?
YES. Longshoreman Insurance coverage must be provided for those directly involved in the installation or repair of diesel engines on board a recreational vessel 65 feet or more in length.
3) The insured installs flooring services on ships, both inside and out. The work is being done for the Navy. Are these employees covered?
YES. The employer has definite exposure under the Longshore Act, as the activities constitute ship repair.
4) Would I as an employer who rents out recreational boats be subject to the Longshore Act?
NO. Section 2(3)(b) of the Longshore Act excludes such individuals from coverage.
5) Would my business that rebuilds and remanufactures small boat motors, whose owner occasionally goes out on the water to test these motors, need Longshore coverage?
NO. Not unless the boats were commercial vessels or recreational vessels over 65 feet in length.
6) My employer repairs stoves and refrigerators. The employees occasionally go onboard ship to repair such items. Would they need coverage?
YES. A worker who goes on board a ship to repair equipment that is installed or attached to the ship is performing maritime employment, and Longshoreman Insurance or Jones Act Coverage is required.
7) If an employee is building a residential dock, (not at a marina), which will be used by recreational vessels under 65 feet in length, is he covered by the Longshore Act?
YES. The 65-foot recreational boat limitation would not be applicable. This limitation only applies to individuals engaged in building, repairing or dismantling a recreational vessel under 65 feet in length. The dock builder would be covered, even if only part of his work is performed over the water.
8) My employer does a small amount of the cleaning of officers’ quarters on a ship, less than $500 per year payroll. It is a very small part of their operation, and the U.S. Navy does not employ them. Do they need Longshore Coverage?
YES. The services provided by your company are not specifically excluded under the Longshore and Harbor Workers Act.
9)I am a commercial electrical contractor and my company performs work around the Southeast, consisting of electrical wiring within buildings. We are in the process of bidding the electrical work, as a subcontractor, for the electrical portion of the renovation work for a warehouse at the Alabama State Docks. We will perform only the electrical wiring, installing of light fixtures, inside and on the warehouse. We will not perform any work on any ships or cargo carrying vessels. Our work will be no different from any other of his jobs, except for the fact that the location is the Alabama State Docks. Does my company need Longshore coverage?
YES. Your company would need Longshore coverage inasmuch as you are repairing a harbor facility, an integral part of the loading and unloading process.
Longshore Reform Act of 2009 FAQ-
Who does this change affect?
The only ones to feel this effect are those who work on recreational vessels over 65 feet in length.
How will this affect my current LONGSHORE premium?
The will varies by state, but for example in Florida it will result in a reduction of the current LONGSHORE premium by approximately 55% for those people affected by this change for the period from February 17th 2009 to your natural policy expiration date.
How do I get this reduction now?
Different insurance companies and agents will have different methods. Contact your current agent.
How do Corporate Officer exemptions effect this change?
If Officers who do any MARINE work on ANY vessel of any size attempt to use the officer exemption under various State Act law, they lose the exclusion under LONGSHORE and are then are required to carry LONGSHORE coverage. Revoke those exemptions in order to protect the LONGSHORE exclusion for recreational boat repair.
How do I revoke an officer exclusion?
Download and complete the revocation form from your state. For Florida, it is a DWC-250-R. File this with the state AND send a copy to your insurance agent and ask the agent to have the officer added BACK to the policy. You may be asked to sign a "No Loss" letter by certain insurance companies.
What about Officers who do EXCLUSIVELY Clerical or Sales Work?
They can use normal State Act Exclusions and Filings.
What about people signed on as "crew?"
True CREW should be covered under vessels P&I insurance, but case law holds that a crewman must spend at least 30% of their time in service of a particular vessel or identifiable fleet of vessels, so someone signed on for a week or two to perform repair/maintenance work will never escape the need to buy the proper coverage for them.
What constitutes Manufacturing/Building?
This change in the ACT is so new that there are no definite answers here, but the best opinions we could find tell us that the function goes with the Vessel. In other words, if the vessel is a new build or conversion, then all work for that vessel is considered manufacturing/building.
Conversely, if the vessel is being repaired all work on that vessel is considered repair, even if it includes fabricating some parts or components.
Is a Sole Proprietor Exempt for Longshore?
Whilst in theory, a Sole Proprietor is exempt from Longshore, they are no longer considered a Sole Proprietor "as soon as they work at the direction of another." This means that working in or for a shipyard, the Sole Proprietor, has the same coverage issues as all other businesses.
I only have a couple of employees, Can I opt out of Coverage Under the Longshoreman and Harbor Workers’ Compensation Act? Small Employers Opt Out of Coverage Under the Longshore and Harbor Workers Act?
There are some states where small employers as defined in the state insurance law, or even large employers under certain conditions, can “opt out” of the states’ workers’ compensation system.
Is this ever an option under the Longshore Act? Don’t even think about it.
Under section 932 of the Longshore Act, an employer has two choices with regard to the insurance requirement. The employer can purchase first dollar coverage from an insurance carrier authorized by the U.S. Department of Labor to write Longshore Act coverage, or it can obtain the authorization of the U.S. Department of Labor to self-insure its Longshore Act obligations. An employer can obtain self-insurance authorization individually, or it can satisfy the self-insurance option through membership in a DOL authorized group self-insurance fund, such as The American Longshore Mutual Association). These are the maritime employer’s only choices.
An “employer” is defined in section 902(4) of the Longshore Act:
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}.
In other words, if a worker is a maritime worker, then his employer is by definition a maritime employer. And the maritime employer is subject to the section 932 insurance requirement.
An “employer” in section 902 of the Longshore Act is not defined by size or type of business organization, and there are only two insurance options offered in section 932.
So, no exceptions. Get the coverage.