Frequently Asked Questions

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?

Amswer: 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?

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 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.

Update February 22, 2016 - New Question

This question came to us today. "Other than Longshoreman Insurance or USL&H Insurance, what other types of insurance will we need in order to work aboard a ship doing underwater mapping of the ocean floor?" "We will be joining a crew to analyze their data in order to do ocean floor mining." What is the estimated cost?

Answer: To follow are some of the coverages typically required for an ocean marine risk such as this:
I. General Liability with limits of $2,000,000
II. Marine General Liability with limits of $2,000,000
III. Employer's Liability with limits of $1,000,000
IV. Bumbershoot or Umbrella Coverage with limits of $4,000,000
V. Professional Liability with limits of $2,000,000
VI. Longshoreman Insurance with limits of $1,000,000
VII. State Act Workers Compensation Insurance with limits of $1,000,000
VIII. Automobile Liability Insurance with limits of $1,000,000

The cost of all these coverages on an annual basis will be expensive, depending on the payroll and the gross income of the operations to be performed. All policies are written on an annual basis. The USL&H policy minimum premium will be $15,000 with no payment plan. The other coverages will have a payment plan available with at least 25% down payment and the balance over 8 to 9 payments.

Not all operations will require all the above coverages. Some will only want the USL&H and the liability coverages plus the State Act Workers Compensation coverages.

More specific information can be had with a consultation.

Update February 12, 2016 - New Question

Typically an insurance company insuring a Longshoreman Risk will ask questions similar to the following questions:

Question: Has the applicant had any claims that were paid under USL&H?

Answer: If your workers are lifting heavy things, the company will ask: 1) Are employees provided with and required to wear safety belts for lifting heavy loads, eyewear to avoid eye injuries??

What will be the maximum height they are working on for this job? Are they required to wear proper fall equipment?

Will any of the “over water” duties be done from a vessel? If so, they may have Jones Act exposure and we’ll need to also write an MEL policy – application attached.
The insurance company may need a copy of the cover page and index of written safety procedures

Do you have "emod worksheet?" This is the companies "experience modification factor."

If normal operations of a company is something that an insurance company usually does not like to write such as risks or companies working with insulation, abatement etc…. The policy quote would include a Job Limitation Endorsement. This would mean that USL&H coverage would extend ONLY to insured operations while doing certain operations in certains areas. Any other USL&H jobs during the policy term would be added - SUBJECT TO PRIOR UNDERWRITING REVIEW AND APPROVAL.

Update January 13, 2016 - New Question

Is there a problem or do I need to have USLH coverage for my employees who work in foreign ports around the world?

Is there a problem, or do I need to have USLH coverage for my employees who work in foreign ports around the world?

The longshore and Harbor Workers' Compensation Act (LHWCA) provides benefits to "any person engages in operations of longshore, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker...".

The above defined persona have status under the Act which means as long as they are injured in a covered location (situs), they should be covered by USL&H and receive the appropriate benefits for their injury. "Situs," as defined in the USL&H Act, stipulates that the disability or death must occur "upon navigable waters of the United States."

So, if the US citizenship repairman is sent to a foreign port to work on a US owned vessel, for its United States based employer, and is injured while in the foreign port, is the repairman covered under the USL&H Act?

The "navigable waters of the United States" is NOT defined in the Act itself, and over time numerous cases have arisen seeking to define the seaward extent of the navigable waters of the United States. Like a bunch of other provisions of the Act, decisions handed down by the legal system clarify the issue. The Administrative Law Judges (ALJ's), the Benefits Review Board (BRB), the federal appeals and circuit courts, and also the US Supreme Court has ruled in such cases as Cover Tankers v. United Ship and Reynolds v. Ingalls included the high seas provision in the definition of the navigable waters of the US. Then along came the decision in Weber v. Loveland and Grennan v. Crowley which found that there was coverage provided in foreign ports. Most recently, the trend was reversed as the Federal Circuit Court held in Kelly v. Tracy that the Constitution and Congress of the United States has no jurisdiction in foreign waters! What confusion, huh? So the waters are a still muddy, but it does seem that the trend now is that the USL&H ACT will NOT provide coverage in foreign waters.

So what is a company supposed to do? How to best protect your company and your employees in the world economy that we find ourselves in? One solution could be to attach an endorsement called Foreign Voluntary WC endorsement or get an International Package of coverages including workers compensation. However, these coverages DO NOT provide for the USL&H Act. So what coverage is needed?

The only way to really cover yourself is to buy the USL&H Coverage, which eliminates the "navigable waters of the US" provision or is a true coverage for worldwide exposures. However, that is not so easy. That is where our experts at longshoremaninsurance.com or Old National Insurance can work with you to provide assistance and work to provide the broadest scope of coverage possible for your clients and their employees. Our phone is (844) 667-6640.

Update December 19, 2015 -

CONTROLLING WORKERS COMPENSATION COSTS

Most business owners sometimes believe that Longshoreman Insurance and workers compensation is controlled by the state or the legislature in the state where they live, and that they have no control over how much it costs them. That is not the case! (Workers compensation rules are State Specific, and the Longshoreman Insurance or USL&H rules are promulgated at the federal government level.) Workers compensation and Longshoreman Insurance costs is the one insurance that the business owner can control. “So how do I control my Longshoreman and workers compensation costs?” Overcharges, have you ever wondered if you are being overcharged for your Longshoreman Insurance? This is a question that you may be asking at this moment.

What causes Longshoreman and Workers Compensation Overcharges?

To follow are but a few reasons that cause confusion for the insurance company, the rule makers at NCCI and the business owners.

One reason is "Class codes." Is your insurance company applying the proper codes to the work that you are doing in your company? Another reason is improper data and record keeping by the insurance company and sometimes by the business owners. The insurance company uses complex actuarial rating formulas that are very difficult to understand at times.

Warning Signs of Overcharges
Over the past 35 years, we have found that certain things can be flags for overcharges or indicators that something may have been overlooked or not done properly and may have caused the Longshoreman and Workers' Comp premium to be higher than proper. Here are some common ones:

Classification changed to a more expensive one after policy begins Classification changed recently to a less-expensive one (raising the question, should the employer been in the less-expensive class in years past as well?)

Increase in the workers' compensation experience modification factor after the policy begins

Recent changes in ownership

Recent changes in business operation

Employer has recently left an employee leasing relationship

Premium credits pertaining to "state act workers compensation- Does your state offer a Merit rating on your State Act Workers Compensation? Does it offer drug credits? Or a Safety Credit? Or a Contractor Credit? If an employer doesn’t realize that a premium credit might apply, and doesn’t fill out and send in the appropriate forms, the employer won’t get the premium credit.

Is your longshoreman insurance or workers compensation policy being written in the assigned risk plan, even though your company can now be written in the voluntary market with lower workers' compensation rates?

One class code may be correct in one state but wrong in another state, resulting in higher or lower premiums being paid.

Only an expert and one who deals with Longshoreman Insurance and its distant cousin of Workers Compensation can keep up with all the complex changes, mod factors, and classification codes being used. Business owners have a business to run, and our brokerage services have found ways to save Marine business and regular businesses thousands of dollars on their Longshoreman and/or workers compensation insurance. We recently saved one business over $75,750 PER MONTH on their Longshoreman Insurance.

Update December 15, 2015

Question: Since I am an owner of my company, can I exclude myself from Longshoreman Insurance like I do on my regular worker's compensation?

Answer: The answer is no. One cannot exclude themselves from coverage under the Longshore Act (USLH) like one does on the regular worker's compensation coverage.

Update December 10, 2015

Question: Will my General Liability Policy (also known as a CGL or Comprehensive General Liability Policy) also cover my water related or marine insurance exposures?

Answer: The answer is "no" probably not. To follow is some policy language.

C.G.L. Watercraft Exclusion - "Bodily Injury or Property Damage" arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading."

If I have a Workers Compensation or Longshore claim takes place how do I report the claim?

Answer: The Workers Compensation and Longshore claim must be reported directly to the carrier or insurance company involved. We furnish the details on how to do this with each binder we furnish and if you have any questions, please call us at (844) 667-6640 or (205) 221-5466 or after hours at (205) 275-5005, and we will be more than happy to help you with your claim. Harris Insurance stands ready to help you with your Commercial Marine and Longshore business and are committed to providing you with the best markets, resources and assistance you need to run your business.