Page 22: of Marine News Magazine (June 2016)

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COLUMN LEGAL

Additional Insured Coverage –

Make Sure That Marcel is Your Friend

A mechanism where companies can provide additional insured coverage to their clients that overcomes LOIA restrictions.

By Larry DeMarcay

The logistics of operating vessels are T M E

HE ARCEL XCEPTION dif? cult and require the teamwork of a All is not lost. The courts have carved out an exception large number of companies. The team to this additional insured prohibition. It provides a mecha- often includes companies that provide nism where companies can provide additional insured cov- vessels, crew, catering, equipment, sup- erage to their clients or customers that overcomes these plies and repair vendors. As many of LOIA restrictions. To overcome this restriction, the par- these relationships are long term in na- ties must craft an additional insured provision pursuant to ture, but require sporadic use, the par- the United States Fifth Circuit Court of Appeal’s holding ties often enter into a master service in Marcel v. Placid Oil Co. This exception is commonly

DeMarcay agreement that outlines the terms of the referred to as the Marcel Exception and the insurance pre- service. Many of these agreements include mutual indem- mium to be paid is referred to as the Marcel Premium. nity obligations where each party usually accepts responsi- The Marcel Exception allows for insurance coverage for bility for indemnifying the other party for injuries to their a prohibited indemnity obligation when the party being employees. Under maritime law, such indemnities are valid. indemni? ed pays for its own additional insurance coverage and no part of the cost of the additional insured coverage

K L is paid by the party procuring the coverage. To meet this

NOW THE AW

Unfortunately, if you are working around ? xed plat- requirement, and obtain valid additional insured coverage, forms, docks, or other locations that fall within the scope the potential indemnitee must pay the premium to the of the Longshore Act or state law, several states, includ- other party’s insurance company that covers the costs asso- ing Louisiana, have adopted anti-indemnity statutes that ciated with adding the indemnitee as an additional insured prohibit indemnity obligations in an attempt to protect on the policy. smaller companies that do not have the bargaining power Although many contracts include the language required needed to negotiate with large oil companies and other for the execution of the Marcel Exception, very few trans- large marine operators. actions, in practice, meet the requirements. In the event

Although all states with anti-indemnity statutes pro- that the agreement includes the appropriate Marcel Excep- hibit indemni? cation, several states allow for the procure- tion language, but the indemnitee is not provided with an ment of insurance coverage that creatively indemni? es the invoice for the procurement of this coverage, or, if an in- other party, via additional insured coverage, for injuries to voice is issued, it fails to pay for the actual coverage, such these employees. However, the applicable rules vary from coverage is not valid. Furthermore, in the event that the state to state. For example, on the Gulf Coast, Texas al- amount of premium requested and paid does not re? ect lows for such additional insured coverage where Louisiana the actual cost of procuring the insurance coverage, the does not. provision will be invalid.

Under Louisiana law, any provision in any agreement This simple process provides many potential pitfalls that that requires additional insured insurance protection is can sink your attempt to obtain indemnity. For example, prohibited by the Louisiana Oil Field Anti-Indemnity Act many companies have insurance policies that include a blan- (LOIA) and is null and void and of no force and effect. So, ket additional insured provision that provides coverage to if you are operating in Louisiana waters, or off of the coast entities that are contractually named as additional insureds. of Louisiana, and you sustain an incident where you may Although such a provision would be valid absent the anti- be entitled to additional insured coverage, the statute, on indemnity statute, such a provision does not overcome the its face, prohibits such coverage. LOIA restrictions as it does not fully comply with the Mar-

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