Marine License Insurance – Questions & Answers

John Konrad
Total Views: 127
May 12, 2010

Note: With the recent incident in the Gulf and gCaptain members are performing non-routine jobs in and around the oil slick, a few have asked me if I carry license insurance. While most of these jobs are directly sanctioned by the Coast Guard, please contact them directly if you are unsure, license insurance is an option I believe all US mariners should at least consider. The following is an interview posted to this blog last year which answers the basic questions about this type of insurance. More detailed information can be found on Mr. Mellussi’s website HERE.

Since the first tree was carved by our ancestors for the purpose of water borne transportation risk has been associated with our industry. Vessel build quality, the training of mariners, a culture supporting safety are all elements under the control of a shipping company but despite great strides being made in every element under our control, ship still happens.  To mitigate risk, shipping companies take out hull, P&I and various other types of Marine Insurance. They also insure their work force by purchasing health, dental and accident insurance from medical providers. Those looking to ship cargo take are also well protected against loss, if they fail to insure the cargo a shipper might accept the goods for transport but accepts little liability if, say, a container gets washed overboard.

With multiple types of insurance working together to protect every element of a voyage their is currently one looming gap; insuring the maritime officers against the revocation or suspensions of their license. To make matters worse some license holders are allowing the U.S.C.G. to serve as judge, jury and executioner by signing a “Settlement Agreement” in which they prematurely – and needlessly – surrender their licenses in the confusing moments following a marine casualty. This happened immediately after the Empress Of the North grounded on a rock near Juneu Alaska. The 3rd mate had been asked to cover the watch of the 2nd mate and, despite knowing a difficult turn would occur on his watch, the captain provided no direct supervision or guidance. This occurred 2 weeks after the mate had graduated from California Maritime Academy.  Luckily this individual had the foresight to ask our opinion in the matter and it was quickly resolved.  But if the USCG is making demands, you may not have time to find a lawyer and if you do the costs will be high.

Ralph  Mellusi is an admiralty lawyer specializing in this field and has represented a high number of mariners on behalf of MOPS, the leading provider of Marine License Insurance in the United States. We sat down with Ralph to ask a few questions.

A recent study in Tradewinds predicts a 20-30% increase in maritime casualties over the next 5 years. 2009 has been a banner year for accidents worldwide, how does the future look from your perspective?
The future trend is towards more aggressive administrative actions against licensed mariners. Heightened environmental vigilance, and awareness of the public create added pressures on the Coast Guard to maintain high levels of professional competence. Another contributing factor is the increase in ship size transiting pilotage routes. Dredging has not been able to maintain pace with deeper ship drafts.  Larger vessels, less underwater clearance and narrow channel widths at times stretch the safe limits of ship maneuverability. Technology is also moving rapidly. It is not unusual for pilots to encounter new propeller and rudder designs which have unique maneuvering characteristics which at times are not adequately described in the Pilots cards. Freshly minted Third Mates/Engrs from our maritime academies will assume watches and responsibility on vessels having technology which is often above and beyond what was taught at school. The schools do a great job but there are limits to what can be taught in a four year period which in part utilize training ships which are less than modern. The Coast Guard believes that one of the best ways to maintain minimum professional standards  is to conduct public hearings in which mariners are held accountable for their actions. In instances in which a mariner is determined to have acted negligently, appropriate remedial measures are taken to meet the circumstances. This could include license revocation, suspension, probation, required classroom instruction, simulator training or observer time in the wheel house.


Who are the most at risk of having their licenses revoked, the entry level 3rd mate, captain, Chief Engineer? Are premiums adjusted by experience and position?
Certainly the novice Mates and Engineers for the reasons I described above are particularly at risk until they reach the point where they have acquired a sufficient degree of familiarity with the vessel and their duties.

Taking over a watch on a ship you have never seen before is a frightening proposition.  It takes a few months to learn a power plant, i.e. to scope out the system  and to know where the key valves and components are located and how to start up and shut down pumps, systems etc.  You no sooner come up to speed and your tour is over.  The next ship may have a different power plant and you sweat out the process all over. The same is true on the bridge.  Beyond this point, those most at risk are the department heads because of the greater responsibility.   Location has a lot to do with this as well.   Have the misfortune to be involved in an incident in New York Harbor which is written up in the local papers more or less guarantees maximum Coast Guard, NTSB response.


Can you tell us a bit more about the trend of “Settlement Agreements” seen over the past few years?
Settlement agreements are relatively new in the area of Administrative License Procedures. This came about as a result of changes in the authority given to the Administrative Law Judges  (ALJs).  In past times, the ALJs had no authority to discuss or entertain settlement. This meant that the only opportunity for settlement discussions was before the CG filed the formal charges.  Now that the authority has been given to the ALJs,  settlement discussion are always available. This is a good thing for the mariner because once formal charges are presented, the mariner has a powerful weapon of “Discovery” which means he/her attorney can demand documents, statements and other relevant materials from the CG.  It is often the case that when all the information is made available through discovery that the mariner and the CG are in a better position to discuss a settlement. The strengths and weakness of the case are now exposed.  The issues become fine tuned.


Click HERE to continue reading part 2 of this interview.


The above comments are intended to provide a general overview of my experiences as a MOPS attorney and agent. Conditions and terms contained in the MOPS Policy control.

Ralph J. Mellusi Esq.
Tel: 212 962-1590 Fax 212 962-1590

Email  [email protected]

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