Frequently Asked Questions
Answer:
Here are some of the recent business types we have insured or worked on in the past 6 months.
-Boardwalk and Bridge Construction
-Marine Mining
-Boat Livery
-Welding / Ship Repair
-Repair service to shipyard
-Shipbuilder
-Commercial Diving
-Marine Electrical Contractor
LONGSHOREMAN INSURANCE RECENT CHANGES AS RELATES TO RECREATIONAL BOAT EMPLOYEES -
Are you involved with repair, dismantling and manufacture of recreational boats? If so, you need to pay attention to some recent changes and regulations on the (LHWCA) Longshore Insurance requirement.
A recent 2009 change in the law is as follows: IF YOU REPAIR OR DISMANTLE A RECREATIONAL BOAT OF ANY SIZE, THIS WILL NOT CAUSE YOU TO BUY LONGSHORE INSURANCE IN MOST CASES. THERE IS STILL A "maybe" questions, however. An exception to the rule is that if you are repairing a foreign flagged recreational vessel in the USA, then you fall under the exception to having to have USLH insurance. If your firm also works on non-recreational vessels, then, make sure that you keep excellent records showing the payroll of non-recreational boat repair work and recreational boat repair work. This can save you thousands and thousands of dollars on your Longshoreman Insurance premiums!
Other exceptions to the USLH rule is when you work on public vessels such as police boats. Keep good payroll records on this as well. Vessels used in the military or commercial uses are NOT exempted from having to buy USLH insurance.
The US Department of Labor has a website that is very good, and discussion can be found in the Federal Register.
December 9, 2015 update
Longshoreman and Marine Insurance Definitions and Questions.
When an entity or person charters a vessel, there are usually only 3 types of charters exercised, as follows:
A. What is a "Voyage Charter "? A voyage charter is whereby the charterer is "leasing" space on the vessel (a cargo hold or tank) for one voyage only. The charterer is essentially "along for the ride" since he exercises very little operational control over the vessel.
B. What is a "Time Charter"? A time charter is where the charter leases the vessel for a perior of time (usually a year or more). The charterer shares operational control of the vessel with the Vessel Owner, and the ship's Master answers to both parties. The sharing of control normally divides between the vessel's cargo operations (mostly under the control of the charter) versus vessel operations (under the control of the Vessel Owner).
C. What is a Bareboat (Demise) charter? - this is where the charterer essentially stands in the shoes of the Owner and leases the vessel for a significant period of time. The charterer has full operational control over the vessell and bears all the expenses to operate and maintain the ship. This arrangement allows a charterer to "look like" a Vessel Owner but not carry the expense of the costly asset on his balance sheet.
In case you come across this term "Owner Pro Hac Vice," this means taking the place of another.
Longshoreman Insurance is very expensive, and the cost must be included in the bid for the job. Most of the time when a contractor is bidding on a job, there will be a "Spec Sheet of Insurance Required." To follow is a SAMPLE INSURANCE AGREEMENT or "insurance required specification sheet:
December 7, 2015
(a)Comprehensive General Liability insurance covering claims of passengers or other third parties to the extent by the negligent act or omission of Contractor's employees or other Contractors
(b) Worker's Compensation/Employer's Liability insurance covering its employees. Said insurance shall include a Longshore and Harbor Worker's Compensation Act Coverage Endorsement and a Maritime Coverage Endorsement with no territorial limits. The coverage shall include liability (if any) for:
(i) Maintenance and cure, as well as personal injury or death claims asserted by Contractor's employees or their estates;
(ii) Repatriation, loss of personal effects and other costs to employees (including, without limitation, burial costs) in the event of death, casualty or termination of a voyage.
(c) All such insurance shall be in form, in amounts, with carriers and on terms reasonably satisfactory to SAMPLE COMPANY and shall name SAMPLE COMPANY as additional insured (with respect to General Liability Insurance). To the extent, Contractor is liable under (a) above. The contractor shall provide to SAMPLE COMPANY, prior to the commencement of the term of the Agreement, Certificates of Insurance evidencing such coverage.
Once you as a contractor have the required insurance in hand, give us a call at (844) 667-6640, and we will work with you to understand what you must have and the costs and risks associated with the insurance. Email is [email protected] or after hours at (205) 275-5005.
November 28, 2015
Our agency insured this client just last week. His company is a welding and repair contractor on the Gulf Coast and had to have State Workers Compensation, Longshoreman (USLH) Insurance and Marine General Liability for his operations. They do not work aboard a ship, but work near the dockside. We have had clients who were required to have the USL&H or Longshoreman Insurance in place even though their job site was 5 miles away from the Bay or the body of water. As he is just now getting into business, we had to search our markets to get him coverage at a price he could afford. We call and emailed over 7 of our insurance companies before we arrived at a premium amount he could afford and one that had all the necessary requirements to satisfy his contract. It took us a couple of weeks to secure his quotes and his coverages. His projected payroll is around $250,000 and his down payment for the two policies was around $16,570. He will be making monthly payments as we go along and since his payroll is an estimate only, he will be keeping a sharp eye on the payroll over the coming 3-6 months in order to see if we need to adjust the payroll during the policy periods in order to avoid having a large audit due after the end of the policy period.
Other FAQ Questions:
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 is "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:
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!
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.
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.