1. Forms
2. WC
3. WC-00-02-03

What the form is

The WC 00 02 03, titled Voluntary Compensation Maritime Coverage Endorsement, is an endorsement to the standard Workers Compensation and Employers Liability Insurance Policy. Its primary purpose is to provide workers' compensation-like benefits on a voluntary basis to employees who are masters or members of the crew of a vessel and are typically excluded from compulsory workers' compensation laws. This insurance applies to bodily injury by accident or disease, including resulting death, sustained by these employees. The benefits paid are equivalent to what would be required if the employer and these maritime employees were subject to the workers' compensation law of a state designated in the endorsement's schedule.

Classes of business it applies to

This endorsement is specifically designed for employers who have maritime exposures involving employees working as masters or crew members on vessels. Examples include:

• Owners of fishing fleets
• Tour boat operators
• Ferry services
• Other businesses operating vessels where crew members might not be covered under standard state workers' compensation acts or federal acts like the Jones Act, or where the employer wishes to provide a defined benefit package irrespective of fault.

For instance, a company operating a small number of tugboats in coastal waters might use this endorsement to provide coverage for its captains and deckhands.

Special considerations

• Voluntary Coverage: The coverage is voluntary, meaning it applies when the employer is not legally mandated to provide workers' compensation benefits to these specific employees.
• Prerequisite Endorsement: The Maritime Coverage Endorsement (WC 00 02 01 A) must typically be attached to the policy for the WC 00 02 03 to be applicable.
• Release and Subrogation: Before benefits are paid, the injured employee (or their beneficiaries) must provide a written release of liability to the employer and the insurer, and transfer their rights to recover damages from third parties to the insurer.
• Exclusions: The endorsement does not cover any obligation imposed by a workers' compensation or occupational disease law, or any similar law. It also excludes bodily injury intentionally caused or aggravated by the employer.
• Geographic Scope: Coverage for bodily injury applies when it occurs within the territorial limits of, or during the operation of a vessel sailing directly between ports of, the continental United States of America, Alaska, Hawaii, or Canada.
• Jones Act Interaction: This endorsement effectively changes the Jones Act exposure for covered employees from a negligence-based liability to a benefits system similar to workers' compensation, based on the scheduled state's law.

A key scenario for use is when an employer wants to provide a predetermined level of benefits to crew members who might otherwise have to sue under maritime law (like the Jones Act) to recover for injuries, a process which can be lengthy and uncertain.

Key information for agents and underwriters

• Risk Assessment: Underwriters must carefully evaluate the nature of the maritime operations, the type and condition of vessels (which should be described in the Schedule), the experience of the crew, and the specific state law designated for benefit levels.
• Confirm Prerequisite: Agents and underwriters must ensure that the Maritime Coverage Endorsement (WC 00 02 01 A) is also included in the policy.
• Pricing: Premiums should reflect the unique risks of maritime employment, the voluntary nature of the coverage, and the benefit levels of the chosen state's workers' compensation law.
• Coverage Coordination: It's important to understand how this endorsement interacts with other potential coverages, such as Protection and Indemnity (P&I) insurance. This endorsement is not a substitute for P&I but can complement it by providing defined benefits to crew.
• Client Counseling: Agents should explain to clients that this endorsement provides specific, pre-determined benefits, which can help manage liability and provide for injured crew members outside the scope of compulsory laws. It also highlights the conditions, such as the release requirement, before benefits are paid.