In our previous piece, we reviewed the Longshore and Harbor Workers Compensation Act. Now, let’s look at some terms you’ll find used in marine insurance and review marine coverages.
Status and Situs
Whom does the Act cover? The typical exposure for LHWCA is the longshoreman while engaged in maritime employment upon navigable waters and in areas adjoining navigable waters. Two important terms under the LHWCA are “status” and “situs.” The status of an employee triggers coverage under the LHWCA—the employee qualifies as an employee under the Act—status, and the injury occurs at a covered location under the act—situs.
The situs test is one part of determining coverage. Is the employee working over or on navigable waters, defined as dry docks, piers, wharfs, terminals, buildings, or marine railroads or when employees are loading, repairing, building, or unloading a vessel?
Navigable waters is defined in 33 CFR 329.4 as “…those waters that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible for use to transport interstate or foreign commerce….”
What about the worker’s status? Does the Act cover all marine workers? In 1984, Congress again worked to limit coverage under the LSHWA by excluding certain classes of employees. Clerical employees and those employed by a marina or a camp not engaged in construction or marina expansion are not covered, for example. Shipbuilders of recreational vessels under 65 feet in length and employees working on small vessels under 18 tons or on repairs of same are not covered. Aquaculture workers also are not covered.
Coverage under the LSHWA does not apply to vendors, suppliers, or transporters temporarily on the premises of the covered employer not performing an employee’s job (think subcontractors doing specialized work, such as repairing a broken water main).
The courts have interpreted the LHWCA status test liberally. Even if the employee qualifies under the status test, the injury must occur on a site covered under the situs test. If injured at a non-maritime location, state workers’ compensation coverage should apply. Employers can usually add LHWCA coverage to the state workers compensation policies by endorsement for incidental exposures.
Maritime coverages can be confusing. An experienced wholesaler, given all the facts, can guide you in determining which coverage is right for your insured.
Other Exposures Under the LHWCA
Failure to carry the correct coverage can result in criminal penalties. The employer and the president, secretary and treasurer of a corporation that is required to carry LHWCA coverage and fails to do so can face a fine of up to $10,000 and imprisonment. Getting this coverage right is very important.
The Outer Continental Shelf Lands Act
The Outer Continental Shelf Lands Act (OCSLA) covers employees working on fixed offshore drilling platforms and other production platforms. The outer continental shelf typically includes all submerged lands beyond a coastal state’s territory, which normally extend three miles. Florida and Texas, however, can extend by as many as ten miles. The standard workers’ compensation policy extends LHWCA coverage to these employees.
However, employers face a unique exposure with workers located on offshore platforms – the coming from and going to the platform. If workers sustain an injury while on transport vessels enroute to or from a platform, they face a unique exposure. Marine Employers Liability (MEL) coverage can provide protection for that gap.
The OCSLA is similar to the Jones Act, which we will discuss later in this paper. Designed to cover oilrig workers, maintenance workers and roustabouts who routinely work offshore, this law establishes federal jurisdiction over offshore underwater lands. The OSLA extends the LHWCA to the “death or disability of an employee resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf.” Even while working onshore, if the majority of an employee’s duties keep the roustabout on a platform, courts will seek a causal link between the injury and offshore duties.
Marine Employers Liability Coverage
MEL is an admiralty law that insures loss of life, illness and injury to employees classified as seamen while in service on a vessel. MEL does not cover benefits under state workers compensation laws or under federal workers compensation laws. It protects two classes of employees: your employee while aboard a non-owned vessel and employees temporarily on one of your own vessels. For example, an injury may occur as your employee rides on any non-owned vessel, for example to an oil platform.
Commercial divers face unique risks, and coverage is potentially available for diving even to depths over 130 feet.
If an employee brings a claim under admiralty law, it is a tort-based claim and MEL can help provide coverage for those claims. Maritime employers face no requirement to buy MEL. However, without MEL coverage, award amounts can be catastrophic and the insured must pay judicial damages, including legal fees.
Among the important facts to know about MEL are that no standard MEL form exists and no state or federal law regulates coverage. Forms vary among MEL insurers, so read forms carefully and ask for coverage advice if you are unsure about which form to select. MEL claims pose an attractive target for plaintiff attorneys since the laws work in favor of the injured party. Payouts are usually larger than payouts under the LHWCA or state workers compensation. Therefore, if an agent should have offered the coverage and failed to do so, an errors and omissions claim against that agent is likely.
In our next piece, we’ll navigate the Jones Act, one of the broadest marine coverages available.
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