Here are some frequently asked questions about marine license insurance.
What is marine license insurance, and do I need it?
Marine license insurance is a form of professional liability coverage which is specifically designed for mariners holding a U.S. Coast Guard license or a pilotage credential. The policy will cover the cost of legal defense and associated expenses (such as expert witnesses) to defend your license in the event that you are required to appear at an administrative proceeding of the U.S. Coast Guard, state pilotage commission, or other governmental authority, as the result of a vessel casualty or incident. Coverage options including Civil Legal Defense, Civil Legal Liability, and up to twelve months’ Loss of Income Coverage are also available.
While professional liability coverage is required for many professions (e.g. doctors, dentists, insurance agents), it is not required for mariners and is a discretionary purchase. Given the reasonable cost when compared to the coverages and limits provided, it’s a prudent purchase for all licensed mariners and acts as a great group benefit and retention tool when purchased by an employer for its licensed officers.
How much does license insurance cost?
An individual policy, purchased through our online platform starts as low as $290 annually. Pricing is based on your license grade and varies based on the coverages and limits selected. Optional coverages include Civil & Criminal Defense (up to a limit of $250,000), Civil Legal Liability (up to a limit of $1,000,000) and Loss of Income (up to a limit of $25,000 monthly). A “Premium Coverage” package includes all coverage sections and, depending on your license grade, can be purchased for under $1,000 annually.
Group policies are available with negotiated rates depending on the size of the group.
What are the most common claims that are made under the policy?
In our experience, the vast majority of the claims that we see begin under “Basic Coverage” for License Protection & Defense and are related to vessel collisions, allisions, groundings, etc. We’ll receive a call through our 24/7 claims hotline from the policyholder letting us know of an incident or casualty involving the vessel they were working on. They will be immediately connected to an admiralty attorney who will guide them through the initial questioning from the U.S. Coast Guard or other governmental authority. Most of these claims are resolved quickly with defense costs typically under $10,000. If the situation develops further and the policyholder must appear at an Administrative Law Judge proceeding, a local admiralty attorney will accompany them to all hearings until final resolution. In these cases, claim costs can run into the tens of thousands, particularly if expert witnesses are provided. Claims for Civil Legal Defense and Civil Liability (optional coverages that can be added) occur less frequently but have the potential for much larger claim amounts or damages. In the event that the policyholder is unable to work due to a license suspension or revocation, or must work below their license rating due to a reduction in grade, loss of income coverage (if purchased) will provide up to twelve months compensation. (NOTE: All of the examples above are for covered claims. Consult the policy terms and conditions for coverage specifics.)
If I’m a state pilot with limited liability, why should I consider purchasing a license insurance policy?
While there is frequently a limitation on the fine that a pilot may be required to pay as the result of a marine casualty/incident, this will not prevent them from being named in a civil suit. If the pilot is involved in a major casualty involving loss of life, significant pollution, or significant monetary damages, it is likely that they will be brought in on the subsequent lawsuit(s) and will be required to provide a defense. We experienced this recently when one of our policyholders was named in a suit brought forth by the vessel owner’s P&I club after a casualty. The judge ultimately removed the individual from the suit, but not before several hundred thousand dollars in defense costs were incurred, all of which was covered by the “Civil Defense” section of their license insurance policy. In the unlikely event that the respective state’s limitation is broken, the “Civil Liability” section of the policy (if purchased as an optional coverage) would respond. Loss of Income coverage is also available in the event the policyholder’s pilotage credential is suspended or revoked. For any claim where representation is required, we would look to use a local admiralty attorney with expertise in the applicable state’s pilotage law, and, at the request of the pilot association, we frequently work with attorneys that they have an existing relationship with.
Can my company provide license insurance coverage as a group benefit for all of our licensed deck/engine officers?
Yes – a license insurance program can be tailored for your group which addresses your unique coverage needs at a reduced group rate. In our conversations with vessel owners, pilot associations and other groups, we have heard time and time again that this product is viewed by mariners as a key employee benefit and crew retention tool. It is increasingly difficult to attract and retain top talent so this can be a great benefit to offer beyond the traditional benefits package.
We maintain an extensive panel of admiralty attorneys around the country that our policyholders have access to. However, if your organization has a preferred attorney, we will vet them and, in most cases, approve them for use on claims involving your officers. The key is to get an attorney with specific knowledge of local laws that can best protect your mariners’ interests.
If a company purchases a group license insurance policy for its officers, would there be any overlap with the vessel owner’s P&I policy in the event of claim?
This depends solely on the circumstances surrounding a specific claim, and we will work closely with the company’s risk management team to ensure cooperation and alignment in all aspects of the claim response. That said, a program structure that is frequently purchased by companies for their officers provides the following two coverages only: Section A: License Protection & Defense, and Section E: Loss of Income. This structure limits coverage under the license insurance policy to defense of the officer’s U.S. Coast Guard license only (and any loss of income) and thus avoids any overlap with a company’s potential third-party liability defense that would be addressed by their P&I policy.
I primarily operate uninspected passenger vessels or have a charter business, do you have coverage option for me?
Yes, captains or crew providing professional services on uninspected passenger vessels (not COI or Coast-Guard inspected vessels) are eligible for coverage with 360 Coverage Pros at lower limits of liability and premium cost. Coverage which includes license protection & defense, civil and criminal defense, and civil legal liability can be purchased for roughly $500 annually and provides our insureds with access to our 24/7 admiralty attorney hotline in the event of a casualty or vessel incident. For captains operating both COI and uninspected passenger vessels; coverage can be purchased at higher limits of liability which applies to their inspected vessel services. Seasonal coverage is also available.