New to Shipyard Work? A Trade Contractor’s Guide to Longshore (USL&H) Coverage
Shipyards are hiring out more of the work they used to do themselves. Navy shipbuilding funding is rising, and yards and their prime contractors are bringing in land-based trade contractors for fabrication, electrical, mechanical, insulation, coatings, scaffolding and labor. If your company is one of them, your insurance needs a second look before you sign the subcontract.
The short version: a regular state workers’ compensation policy was built for land jobs. Work inside a shipyard can fall under a separate federal law, and your state policy may not respond to it.
Two laws, one injury
Every state has its own workers’ comp system. On top of that, Congress passed the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. 901 and following) for people who build, repair and load ships. Insurance people call the coverage “USL&H.”
Whether the federal law applies usually depends on two questions:
- Where was the employee hurt? On navigable water, or on a pier, wharf, dry dock, building way, marine railway or other adjoining area used to build, repair, load or unload vessels (33 U.S.C. 903(a)). A shipyard checks this box.
- What kind of work was it? Maritime employment, which the statute says includes shipbuilders, ship repairmen and ship-breakers (33 U.S.C. 902(3)). The question is the work itself, not what your company normally does.
The law does carve some workers out, such as office and security staff, as long as state comp covers them. Those exceptions rarely fit a crew working on a hull.
Why the prime will ask for proof
Under the Act, if a subcontractor doesn’t carry the coverage, the contractor above it can be held responsible for its injured workers (33 U.S.C. 904(a)). That’s why so many shipyard insurance exhibits spell out USL&H by name, and why a certificate that only says “WC statutory” often gets kicked back.
For the uninsured employer, the stakes are high. The injured worker can sue the company in court, and the company loses key defenses (33 U.S.C. 905(a)). Failing to secure coverage is also a federal misdemeanor carrying a fine of up to $10,000, up to a year in jail, or both, and a corporation’s president, secretary and treasurer can be personally liable (33 U.S.C. 938(a)).
How each trade runs into it
Every job is different, and coverage depends on the facts. These are the situations we see most often.
Metal fabricators and welders
Fitting and welding steel on a hull, module or in a dry dock is shipbuilding work. Parts built in your own shop away from the waterfront are a different question, so track the two separately.
Electrical contractors
Running cable, setting panels and terminating equipment aboard a vessel being built or repaired is part of building that vessel.
HVAC, mechanical, pipefitting and plumbing
Ventilation, chilled water, fuel and piping systems installed aboard ship put your techs squarely in shipbuilding and repair.
Insulation contractors
Pipe, duct and bulkhead insulation aboard ship is long-standing shipyard work.
Painting and coatings
Blasting and coating hulls, tanks and decks in the yard is vessel repair or construction work.
Scaffolding and access
Staging around a hull or inside a dry dock puts your crew on shipyard ground, supporting the building or repair of the vessel.
Trade staffing agencies
If you place welders, fitters or laborers in a yard, your people face the same tests, and many staffing workers’ comp policies exclude maritime work. See our page on workers’ compensation for staffing agencies.
What to do before you bid
- Get the insurance requirements early. Ask the prime for its insurance exhibit before you price the job.
- Walk the job in your head. Who will be aboard the vessel, in the dry dock, on the pier, or back at your shop?
- Check your current policy. Look for a Longshore endorsement and the states it lists. If you can’t find one, assume you don’t have it.
- Build the cost into your number. USL&H is usually priced differently from state comp, and leaving it out can erase your margin.
- Ask about overseas work. Jobs on bases or government contracts outside the U.S. fall under the Defense Base Act, a separate coverage.
- Set up payroll tracking now. Keep shipyard hours separate from land work so your audit reflects what really happened.
- Get the right certificate. Make sure it shows the USL&H endorsement.
How we help
Harris Insurance is an independent agency since 1980 and has been writing USL&H coverage since 2007. We insure hard-to-place accounts, including contractors whose regular carrier won’t add Longshore coverage. We also write new businesses when the owner has experience in the trade. If you’re getting ready to bid shipyard work, contact us or call O. Rickey Harris at 205-275-5005.
Common questions
My company has never done marine work. Does the federal law still apply?
It can. The Act looks at where the injury happened and what the employee was doing, not at your company’s usual line of business.
Doesn’t my state workers’ comp policy already cover this?
Not automatically. A standard state policy needs a Longshore endorsement to cover federal Longshore benefits, and not every carrier will add one.
What if only a few employees go into the yard?
Even occasional shipyard work can create exposure. Tell your agent who goes, how often, and what they do there.
Is USL&H the same as Defense Base Act coverage?
No. USL&H is for work in the U.S. on or near navigable water. The Defense Base Act covers certain work on overseas bases and government contracts.
Can a new company get USL&H?
Yes. We write new businesses when the owner has experience in the industry.