Is your boat crew putting you at risk?

Most people are familiar with workers’ compensation insurance. On land, employers are required to provide coverage for things like medical expenses and lost wages when employees are injured on the job. Failing to do so may expose the employer to a broader range of liability.

At sea, vessel owners are also responsible for insuring their crew, but the regulations governing employment liability and the way coverage is structured work differently than they do on land. Maritime employment liability is defined by the Merchant Marine Act of 1920, also known as the Jones Act, written to protect seamen from being exploited.

Created in response to the destruction of the U.S. fleet by the German navy during World War I, the Jones Act sought to ensure safe conditions for merchant mariners operating in U.S. waters. Nearly 100 years old now, the Jones Act has been amended several times, but it is still the prevailing law for regulating the safety and workers’ compensation of a crew. Among its key elements pertaining to employment liability, the Jones Act

• Requires compensation for an injured seaman for transportation, wages, maintenance and care.

• Sets standards for vessel maintenance; safety equipment such as lifeboats; and crew qualifications, training and licensing.

• Gives seamen who are injured or become sick while in service of a vessel the right to recover, regardless of whether the seaman or the ship’s owner was negligent in the accident that caused the injury and in some cases illness.

• In cases where the injury was caused in any way by negligence on behalf of the employer, entitles the injured seaman to compensation for pain and suffering, lost wages and other damages.

Adding to the complexity for vessel owners and operators, the Jones Act applies only when jurisdiction falls to U.S. courts. On bigger vessels with large crews operating in multiple jurisdictions, employment liability becomes more complicated based on the registry of the vessel (many are internationally registered), the nationalities of crew members, the reimbursement of expenses, and the logistics of getting the medical care at sea.

Jones Act liability is essential coverage for any vessel with a paid crew. It provides standards of recovery and places limitations on the employer’s liability. But many vessel owners and well-intentioned insurance brokers don’t always understand the full implications of the Jones Act on their maritime employment liability. Many have been led—incorrectly—to think that they’re covered under excess liability policies. Many are underinsured; it’s not uncommon to see a $5 million vessel with only $500,000 in liability.

To complicate things even further, Jones Act liability isn’t available through an umbrella or excess liability policy in the way other employment insurance might be. For example, if you employ a staff in your home, it’s relatively easy to add domestic employment liability to your homeowners insurance and excess liability policy. But the maritime employment liability to paid crew can’t be added to an excess liability policy.

Employment liability is a huge exposure for vessel owners. It’s important to work with an insurance broker who understands the vessel registry, nationality of crew, jurisdictional liability and the full implications of the maritime economics and logistics including the Jones Act, so that proper liability can be arranged.