Longshore And Harbor Workers' Compensation Act Coverage Endorsement (WC 00 03 10)
1. What the form is:
The WC 00 03 10, titled "Longshore And Harbor Workers' Compensation Act Coverage Endorsement," is an endorsement to a standard workers' compensation and employers liability insurance policy. Its primary purpose is to extend coverage to include the statutory obligations of an employer under the federal Longshore and Harbor Workers' Compensation Act (LHWCA). This act applies to employees engaged in maritime employment on the navigable waters of the United States or in adjoining areas such as piers, docks, terminals, wharves, and areas used in loading, unloading, repairing, or building vessels. Essentially, this endorsement modifies the base workers' compensation policy (often the WC 00 00 00) to provide benefits as required by federal law for these specific types of maritime workers, whose injuries or illnesses might not be covered under state workers' compensation laws. It ensures that injured maritime workers receive the appropriate federal benefits for work-related injuries or occupational diseases.
2. Classes of business it applies to:
This endorsement is crucial for employers whose employees perform work covered by the LHWCA. Specific industries and business types include, but are not limited to:
- Stevedoring companies: Businesses involved in loading and unloading ships.
- Ship repair yards: Companies that repair, renovate, or dismantle vessels.
- Shipbuilders: Businesses engaged in the construction of new vessels.
- Terminal operators: Companies that manage and operate port terminals where vessels dock.
- Marine construction companies: Businesses involved in building or repairing structures on or adjacent to navigable waters, such as piers, docks, and bridges.
- Offshore drilling contractors (Outer Continental Shelf Lands Act): While a separate endorsement (WC 00 01 09 C) often addresses this specifically, LHWCA can be an underlying coverage.
- Civilian employees on U.S. military bases (Defense Base Act): This is another extension of the LHWCA, often covered by a specific endorsement (WC 00 01 01 A), but the LHWCA principles apply.
Real-world example: A company that employs longshoremen to load and unload cargo containers from ships at a major port would require this endorsement. If a longshoreman is injured while working on a vessel or an adjoining pier, this endorsement would ensure they receive benefits according to the LHWCA.
3. Special considerations:
- Jurisdictional "Situs" and "Status" Tests: For the LHWCA to apply, an employee's injury must meet both a "situs" (location) and "status" (nature of work) test. The injury must occur on, over, or adjoining navigable waters, and the employee must be engaged in maritime employment. This can be a complex determination.
- Exclusions from LHWCA: The LHWCA does not cover all maritime workers. Seamen (masters or members of a crew of any vessel, typically covered under the Jones Act) and government employees are generally excluded. Also, certain individuals may be excluded if they are covered by state workers' compensation law and fall into specific categories like office clerical workers or employees of recreational operations.
- Federal Law Supremacy: When the LHWCA applies, it generally takes precedence over state workers' compensation laws for the covered employees. Benefits under LHWCA can be more generous than state benefits.
- Requirement to Secure Coverage: Employers with LHWCA exposure are required by federal law to secure this coverage, either through an authorized insurance carrier or by being authorized to self-insure. Failure to do so can result in significant penalties, including fines, imprisonment, and the loss of exclusive remedy protections (meaning injured employees could sue the employer directly for damages).
- Monopolistic States: Even in states with monopolistic state workers' compensation funds (like Ohio, North Dakota, Washington, and Wyoming), employers with LHWCA exposure must obtain separate LHWCA coverage from an authorized private insurer or self-insure, as state funds typically do not provide this federal coverage.
Real-world example: A ship repair company has employees working on a vessel in a dry dock. If an employee is injured, their claim would likely fall under the LHWCA. If the company only had standard state workers' compensation and not the WC 00 03 10 (or equivalent LHWCA endorsement), they could face severe penalties and direct lawsuits.
4. Key information for agents and underwriters:
- Thorough Exposure Identification: Agents and underwriters must meticulously identify any potential LHWCA exposure. This involves understanding the insured's operations, work locations, and the specific duties of their employees. Ask detailed questions about any work on or near water.
- Payroll Segregation: Payroll for employees subject to LHWCA is often rated differently and typically higher than standard workers' compensation classifications due to potentially higher benefit levels. Proper segregation of payroll is crucial for accurate pricing.
- Risk Assessment: Maritime operations can present unique and significant hazards. Underwriters will assess the specific risks involved, such as working at heights, over water, with heavy machinery, and exposure to hazardous materials. Safety programs and loss history are critical underwriting considerations.
- Coverage Gaps: Ensure there are no gaps between state act coverage, LHWCA coverage, and other maritime coverages like the Jones Act (for seamen) or Protection & Indemnity (P&I) insurance. Misclassifying an employee (e.g., a Jones Act seaman as an LHWCA worker) can lead to uncovered claims.
- Underwriting Guidelines: Insurers will have specific underwriting guidelines for LHWCA risks, which may include requirements for safety protocols, experience in maritime operations, and financial stability.
- Extensions of LHWCA: Be aware of LHWCA extensions like the Defense Base Act, Outer Continental Shelf Lands Act, and Nonappropriated Fund Instrumentalities Act, which have their own specific endorsements but are based on LHWCA benefits and principles. Identifying these exposures is also critical.
- Pricing Considerations: LHWCA rates are generally higher due to increased benefit levels and the nature of the work. Underwriters will use specific LHWCA classifications and rates. The "U.S.L. & H.W. Act" classification is often added to the policy.
Real-world example for agents/underwriters: An underwriter reviewing an application for a contractor who occasionally performs repair work on docks and piers must carefully determine if any employees meet the situs and status tests for LHWCA. If so, the WC 00 03 10 endorsement is necessary, and the payroll for those specific operations must be assigned the appropriate LHWCA classification and rate, which will likely be higher than their typical land-based construction classification. Failure to do so could result in an underpriced policy and an unfunded liability for the insurer if an LHWCA claim occurs.