Marine Contractors in Florida have an insurance problem. Distinguishing between your skilled tradesmen, office employees and outside sales staff can be muddy waters when it comes to insurance requirements. These situations get even more complicated when you have crew members that operate barges or vessels to and from job-sites. Many marine contractors/artisans believe that they are subject to “one rate” when it comes to Workers Compensation but, there are different options out there depending on your operations…
Jones Act exposures and Longshore and Harbor Workers’ Compensation Act (USL&H) exposures were originally designed to be mutually exclusive. In other words, employees covered under the Jones Act should not also be required to have coverage under USL&H. In reality, both of these coverages tend to overlap… This overlap can be due to a variety of reasons. Unclear legislation is a large part of the problem. Another issue is “loose interpretation” of the rules by some underwriters and the use of leasing companies, which some smaller to mid-sized marine contractors use to circumvent the system. Whenever we find misclassifications between USL&H and Jones Act coverage there are thousands of dollars being misrepresented. Most of the time these are caused by an insurance agent or insurance carrier that do not understand how USL&H and Jones Act coverage interact.
Longshore and Harbor Workers’ Compensation Act
Who needs USL&H?: The term “employee” under the Longshore and Harbor Workers’ Compensation Act means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker, but such term does not include the following:
(A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work;
(B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet;
(C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance);
(D) individuals who (i) are employed by suppliers, transporters, or vendors, (ii) are temporarily doing business on the premises of an employer described in paragraph (4), and (iii) are not engaged in work normally performed by employees of that employer under this Act;
(E) aquaculture workers;
(F) individuals employed to build any recreational vessel under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel;
(G) a master or member of a crew of any vessel; or
(H) any person engaged by a master to load or unload or repair any small vessel under eighteen tons net.
The Jones Act
Who Needs Jones Act Coverage: The Jones Act was designed to cover the captain and members of the crew. Masters of the crew including commercial divers can be covered as well. A master of the crew is defined as someone who has a substantial connection (in nature and duration) to a specific vessel, or to a fleet of vessels, and whose duties contribute to the function or mission of the vessel or fleet. Most of the time anyone who spends more than a third of their time on a vessel in navigation will qualify as a Jones Act seaman but, this isn’t always the case. When talking about duration and nature in regards to a master of the crew, it’s important to keep in mind that these factors are determined by the courts. Case law is very broad and unspecific, which is why having the proper insurance coverage is crucial. If the courts deem your injured employee (or even in some cases an independent contractor) as ineligible for Jones Act coverage, this uncovered claim could shut down your business.
The Bottom Line
Countless claims have gone uncovered because of these USL&H and Jones Act “overlaps”… Captain, crew and masters of the crew (Jones Act employees) are excluded under the USL&H Act. In other words, if you are covering your Jones Act employees under USL&H and they get injured, you could be caught without coverage. Likewise, if you are covering your USL&H employees under regular workers compensation or Jones Act coverage, you could be caught without coverage. These claims are costly and can put even the largest of marine contractors out of business.
If you take nothing else away from this article, take this: USL&H and Jones Act insurance are mutually exclusive. They should never overlap. This is a common practice in Florida which significantly impacts your bottom line. As a marine contractor, you have enough on your plate between the bidding process, permitting issues, staffing issues and all of the other daily burdens that your business requires. Having a consultant who can guide you through the process is essential. We offer a business analysis for marine contractors in Florida that navigates the intricacies of these two issues and puts control back into the hands of the business owner.
