I was recently asked if it would be possible to put a Marine Workers' Compensation policy in place that could cover a specific incident.
While the question itself appeared logical, fully covering marine employees is not a one-stop-shop.
They were asking for a coverage opinion based on an “activity” (such as diving, or welding) but unfortunately, the law does not allow the activity to be the sole determinate of what policy can and will respond.
An example can be made from Admiralty Claims.
Two policy types can respond to “Admiralty” claims (often wrongly limited to Jones Act claims). They are Maritime Employers Liability and the Crew Coverage available under a Protection and Indemnity policy.
To be eligible for “Admiralty” benefits any employee has to pass some tests, with the most critical being a “substantial connection to a vessel in navigation”. So let’s break this down:
- There must be a vessel…. They don’t need to be ON the vessel at the time… but they need to use the vessels to dive/snorkel FROM. If a diver walks in from the dock, they instantly fail this test.
- It must be in navigation…. Simplistically away from its home dock - not necessarily moving but also not in a landlocked lake.
- And the connection must be “substantial”. Court cases have shown that to be in general 30% of their time or more in service of the vessel, although there are some specific rules around that.
YOU MUST PASS ALL 3 OF THESE TESTS TO GET ADMIRALTY BENEFITS.
If you fail any one of these Admiralty tests, then you fall back under State Worker’s Compensation or Longshore.
So, let’s say we have Jane and Bill, both employees, snorkeling from a vessel in a bay. Both pass tests 1 & 2 quite easily. However, Jane spends 50% of her time working on/from the boats, while Bill only spends 20% of his time.
Jane will have an Admiralty claim because she spends a "substantial" amount of time in service of the vessel. Bill won't have an Admiralty claim and he will get Workers' Compensation benefits instead.
These are NOT insurance rules or policy coverages, these are Federal and State LAWS.
Now just to add a wrinkle. That does not stop Bill from suing you, and in that case, the Maritime Employers Liability/Protection and Indemnity policy turns into a defense-cost policy for you and the rate on those people is much lower because of that.
To sum this whole explanation up: It is impossible to have a policy that covers every type of incident that may happen. Required coverage is dependent on much more than job activity. Maritime Employers Liability and Protection and Indemnity can never cover Workers’ Compensation. Only Workers’ Compensation can cover Workers’ Compensation.
Learn more about this at the Certified Marine Insurance Professional seminar in Houston, TX October 16th-17th, 2019.