Marine Insurance

Do most policies cover Marine Contractors in cases of environmental contamination, or is that something addressed separately?

No and yes. The standard unendorsed Marine General Liability Policy (MGL), does not cover pollution events. Even if endorsed, there is still a very limited amount of pollution coverage. Here’s why. The endorsement is called the Limited Sudden and Accidental Pollution endorsement. As with the standard Marine General Liability policy, coverage is only triggered by actual 3rd party property damage and/or bodily injury. It is in no way a full pollution policy (for example, a slick on the water in and of itself does not constitute 3rd party property damage). The fines, cleanup costs and other expenses would still be the responsibility of the contractor. The contractor should consider a separate contractors pollution liability policy. Coverage should also respond to cover spills that are caused from workboats and barges. Leaks from any storage tanks they own and Auxiliary tanks that are mounted on vehicles. The standard Commercial Auto Policy will exclude leaks from auxiliary tanks mounted on vehicles that are used to fuel equipment.

Whose insurance covers storm damage to work in progress – mine or the property owners?

My answer for this is two-fold: For materials/supplies that the contractor contractually owns when they are storm-damaged, then the contractor is responsible via their own property insurance. If the materials/structure are contractually owned by the 3rd party when they are storm-damaged, then it comes down to whether or not the contractor is legally liable for the damage (if for example, it was an active work site and the contractor neglected to use reasonable care to protect it prior to the storm, that may constitute legal liability). If the contractor is legally liable, then the MCLL form will respond accordingly.

What about damage caused by one of my employees to existing infrastructure, such as utilities, building, fencing and/or equipment?

If the contractor is legally liable and it is 3rd party property, then that is what their Marine Contractors Legal Liability coverage is for.

What if the damage was caused by a sub-contractor I hired?

If property damage occurs to 3rd party-owned utilities, building, fencing, or equipment that is caused by a subcontractor, then the subcontractor’s legal liability responds. If you are dragged into it by the attorneys, Your Marine General Liability Policy will defend (even if frivolous).

By executing a Contractual Risk Transfer (CRT) with the subcontractor and making sure they have adequate limits equal to or more than you have, you can get defended on the other policy and not mar your own loss history.

On a separate note (but keeping with the theme of subcontractors) as respects damage to the insured’s work, we do have the exclusion wording on page 18/19 that gives back coverage for improper work by a subcontractor as follows: Exclusion: Damage to the Insured’s Work “Property damage” to work performed by or on behalf of the insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith. This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on behalf of the Named Insured by a subcontractor.

Am I covered if an employee fails to adhere to established safety procedures and causes injury to another worker?

The Marine General Liability Policy does not respond to employees injuring each other, this would be a workers compensation issue. Each policy has a definition of an insured (what it does and does not include when it comes to employees)

What about weather-related delays as they relate to predetermined deadlines? Is that a contract or an insurance issue?

Contract issue, not insurance.

Workers Compensation and US Longshore Harbor Workers Act

I am a small marine contractor and have workers compensation without USL&H. I build small docks and bulkheads behind people’s homes. Doesn’t my regular workers compensation policy take care of my injured employees?

Answer: No. The act is not optional for certain types of Maritime Employers. To simplify, if you are building structures that are an aid to navigation and / or building structures at any time from a vessel, coverage is required by law. For the exact definition and law, go to www.dol.gov

Are there penalties and fines if I don’t carry USL&H coverage?

Answer: Besides being liable for the entire amount of the injured employees medical, rehabilitation and lost wages, failure to secure coverage will result in fines of no less than $10,000 and/ or imprisonment. If you are an LLC or Corporation, there are no protections under your corporate veil. In fact, all corporate owners, sole proprietors and LLC members and their spouses can be subject to fines and penalties.

What does US Longshore Cost?

Answer: The rate for the endorsement is roughly 50% more for each payroll class subject to the act (see example below). Not all of your payroll is subject to the rate. Depending on what your employees are doing (a/k/a Status) AND simultaneously where they are doing it (a/k/a Situs), determine when the premium is to be applied. For example: If your employees are driving piles for a land based home and are not building any aid to navigation, the payroll for that job will not be subject to the increased cost. Employees may go in and out of the Status and Situs during a project. When both Status AND Situs apply, the rate is applied to their hourly wage. Example: Pile Driving class code 6003 without Longshore, the rate per $100 in annual payroll might be $15.79. The rate for Pile Driving subject to the act, 6003F might be $23.69 per $100 in annual payroll. Workers Compensation Payroll audits are performed after the payroll period to ensure accurate payroll class allocation and remuneration (payroll, bonuses cost of uninsured contractors, etc.)

This sounds complicated, how can I avoid being overcharged?

Answer: Typically a supervisor, or for small firms the employee on the job, will keep accurate records using a time sheet designed for just that. It tracks the employees weekly activities by the hour. Compiling these forms or records for each week, month and year will help you avoid being overcharged when you are audited. Ask us and we will provide you a sample form.

Do I have to report all injuries?

Answer: Yes. If you voluntarily make payments for injuries suffered by an employee, you do so at your own risk and may assume obligations or incur expenses. However, a mandatory separate notice must be filed with the department of labor if it is deemed A USL&H REPORTABLE INJURY: this is defined as “Any accidental injury which causes loss of one or more shifts of work or death arising out of and in the course of employment, including any occupational disease or infection believed or alleged to have arisen naturally out of such employment, or as a natural or unavoidable result from accidental injury. If the employer controverts the right (denies) the right of compensation, it must also file a notice of controversion with the District Director within 14 days after it has knowledge of the alleged injury or death.” Failure to report can result in a fine of no more than $11,000. We can help you file the forms. Just ask.