Longshore Act Question Number 7

Why Is Longshore Act Insurance So Expensive?

Note that the question is not, “Is Longshore Act insurance expensive?” We all know that it is, relative to state act coverage in most instances.

So, let’s start by accepting the premise; Longshore Act insurance coverage in almost every instance will cost the employer more than state act coverage.

Some reasons are self-evident. The traditional maritime occupations of longshoreman and shipbuilder are relatively hazardous, earn high wages, and the maximum Longshore Act rate is higher than most states’ maximums.

Note: The U.S. Department of Labor has announced that effective October 1, 2009, the new maximum rate under the Longshore Act is $1,224.66 per week. This is based on a 2% increase in the National Average Weekly Wage (NAWW). The new NAWW is $612.33. The Longshore Act maximum is twice the NAWW and the Longshore Act minimum rate is one-half the NAWW, or $306.17.

But even when work involves nontraditional maritime occupations, where the work is covered by the Longshore Act, the employer will virtually always pay the appropriate state rate multiplied by a “Longshore factor”. For example, in New York an employer in this situation would pay the state rate multiplied by 1.66 for payroll covered under the Longshore Act. So the employer will pay more in most states in most instances where the work comes under the Longshore Act.

What are some of the factors that may account for this?

The Longshore Act is liberally administered to favor the injured worker;

The Longshore Act has not been significantly amended since 1984, and so does not reflect cost control measures adopted in many states, such as provisions relating to medical management and causation;

The section 920 presumptions favor the injured worker;

The Longshore Act still contains an important provision giving the injured worker his choice of treating physician;

There is no lifetime maximum applicable to Longshore Act benefits.

This is a partial list. It can be debated, expanded, refined. But the conclusion remains.

Longshore Act insurance costs more. There are many reasons. You can probably think of some more.

Top Ten Longshore Questions

As I’ve said, over the years the same Longshore questions have been coming up again and again, and now with AEUs Longshore BLOG there’s a source where these questions can be answered. So here’s my list of the “Top Ten” recurring Longshore questions:

16. Does the Longshore Act apply only to U.S. citizens?

15. Does the Longshore Act apply overseas?

14. What are the “navigable waters of the United States”?

13. What is a subdivision of a state government?

12. Can you exclude corporate officers under the Longshore Act?

11. Can small employers opt out of the Longshore Act?

10. How do you measure the 10 day rule for paying Formal Awards under §914(f)?

9. Does the Longshore Act apply in Guam? In Puerto Rico? In the Virgin Islands? In

the Commonwealth of the Northern Marianas?

8. What does “joint and several” liability mean? And what does “several not joint”

liability mean? And why is this very important?

7. Why is Longshore Act insurance so expensive?

6. Is the Longshore Act fair to employers?

5. What’s the difference between the Longshore Act and the Jones Act?

4. What is a vessel? What is a crewmember?

3. What is the difference between state act comp and the Longshore Act?

2. Where can I buy Longshore Act insurance?

1. Do I need Longshore Act insurance?

The answers to these, and any other questions introduced by BLOG visitors, will be offered in upcoming postings. In the meantime, if there’s a particular question you are interested in please leave a comment with your question.