Whether you are a beginner or an old hand at writing marine liability coverages, these specialty lines can be difficult to understand. Important challenges are associated with placing almost any type of marine liability insurance and even the most experienced broker can miss significant loss exposures.
Thoroughly understanding your insured’s exposures and working with an experienced wholesaler can help you guide your insured toward better coverage choices.
This three-part article will explain the differences among marine liability coverages, including the Longshore and Harbor Workers Compensation Act, the Jones Act, and Marine Employers Liability. We will also cover some other marine laws that might create potentially catastrophic exposures for your insured and highlight some areas where significant coverage gaps can occur.
U.S. Maritime History Provides Maritime Workers Broad Legal Protection
The United States is a leading maritime nation. The sea has always been instrumental to our economy. In addition, the U.S. has 21 maritime “highways,” such as the Mississippi River, the Great Lakes and the St. Lawrence Seaway shipping corridors. America boasts some of the largest port cities in the world. With over 40,000 vessels, the U.S. Merchant Marines encounter significant risks when protecting sea and trade routes so vital to our nation’s economy. Therefore, the rights of maritime and marine workers may be much broader than those provided more commonplace, landlocked employees.
Seamen and maritime employees are unlike regular employees. Shipping and waterborne commerce are so unique and vital to our nation’s economy and the maritime perils so uncommon that the rights of seamen have evolved and been carefully codified in case law.
Maritime law differs from other fields of law, giving rise to the many uncommon perils associated with marine coverages. Any employee aboard a ship or working on or near navigable waters enjoys a lower burden of proof and more liberal coverage interpretations than those provided to their land-based employee counterparts. In one notable 2002 case, Nasser v. CSX Lines, the court found that maritime employers face a more stringent duty of care toward their employees than land-based employers face.
“The vessel owner owes his seamen ‘an obligation of fostering protection,’ which typically translates into ‘a higher duty of care’ than that accorded to land-based torts.”
A vessel as defined by the Supreme Court in Stewart v. Dutra Construction means: “Every description of watercraft or other artificial contrivance used or capable of being used as a means of transportation on water.” This includes dredges, which are capable of transportation.
Because many businesses rely on professional employer organizations to handle the cyclical nature of offshore drilling, this reliance can add additional exposures to the mix. Workers may have a choice of law in maritime personal injury, and if the correct coverage is unavailable, agents could face a significant errors and omissions (E&O) exposure.
Deepwater offshore drilling is again gearing up with the uptick in oil prices. With the current rise in oil prices and renewed discussion about rebuilding the nation’s aging infrastructure, employers may face more maritime exposures with employees working on offshore platforms, over bridges or on piers, or on navigable waters.
Perhaps even more than other lines of coverage, agents must thoroughly understand the insured’s exposures before writing marine liability to insure the account correctly.
The Bermuda Triangle of Maritime Coverages
A swirling mix of coverages surrounds marine workers compensation and employers liability.
- Which applies to your insured’s employees, the Jones Act or the Longshore and Harbor Workers Compensation Act (LHWCA)?
- When does your insured require Maritime Employers Liability (MEL)?
- If your insured has employees working in international waters, how does the Death on the High Seas Act (DOHSA) come into play?
- How broadly is “navigable waters” defined for workers compensation purposes?
All of these variables can cause significant coverage errors
Let’s begin by covering basic workers compensation coverage for marine workers, the Longshore and Harbor Workers Compensation Act.
The Longshore and Harbor Workers Compensation Act
The two types of marine employees are those who work on or near water and “seamen.” The LHWCA is a federal law that covers that first type of worker, those working on or near water. The Jones Act covers seamen, and we will discuss them later in this paper.
In 1927, Congress passed the LHWCA to protect marine workers after state compensation laws failed to provide adequate benefits to maritime workers. While state compensation laws provide statutorily defined benefits to injured workers and limit their ability to sue their employers in most cases, Congress amended the LHWCA in 1972 to allow injured employees to sue third parties for negligence, with certain limitations.
For example, while a Longshore and Harborworker (LS&HW) employee cannot sue the vessel owner for “unseaworthiness” of a vessel, the employee can sue for negligence. The employee cannot, in most cases, turn around and sue his or her employer in a third-party overaction suit. However, a Supreme Court ruling determined the LHWCA might supplement instead of replace state workers compensation law. Employers may need to purchase both state and LHWCA coverage. Nevertheless, courts generally disallow double recovery.
Benefits under the LHWCA are similar to state workers compensation benefits. These include medical bills, temporary, permanent partial and permanent total compensation and death benefits. If the Jones Act does not cover maritime employees, which we will discuss, the LHWCA generally covers certain types of maritime workers.
Next, we’ll look at some of the terms used in marine insurance and review marine coverages.
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