For decades, marine liability followed a predictable framework: shipowners’ exposure was capped based on vessel tonnage under international conventions, and wreck removal costs sat comfortably within that limit.

That framework is breaking down.

Recent legal and regulatory developments are transforming wreck removal from a manageable component of liability into an increasingly uncapped exposure – one that can far exceed all other claim costs.

What's Driving the Change

Evolving legal interpretations of limitation

Recent court decisions in multiple jurisdictions, including Australia's Full Court ruling in April 2025, have determined that wreck removal and environmental clean-up costs are not subject to traditional limitation.

Rising environmental enforcement

Coastal states are exercising greater authority to direct wreck removal operations, prioritizing environmental protection over cost considerations. When regulators mandate immediate action, costs escalate quickly.

Stronger environmental enforcement
More countries are considering accession to the Nairobi International Convention on the Removal of Wrecks 2007, which mandates compulsory wreck removal insurance for vessels of 300 gross tonnage or higher.

Escalating removal costs
Modern wreck removal operations routinely cost $15-20 million or more, often exceeding the vessel's value.

These developments matter to U.S. insurers and brokers even when incidents occur overseas. Coverage placed in the U.S. must respond globally – including in jurisdictions where limitation no longer applies.

The "Severity Multiplier" Problem

Historically, casualty exposure was modeled around vessel value, cargo, limited third-party liability, and pollution risk, with wreck removal folded into the overall cap.

Today, wreck removal acts as a severity multiplier. For example, a $10 million vessel can generate a $20 million removal claim, turning an otherwise limited loss into a major, uncapped exposure.

What This Means for U.S. Marine Insurance Placement

Wreck removal is no longer a minor policy detail – it’s a material risk requiring explicit attention, especially for internationally operating clients.

• Aggregation models may understate severity where limitation no longer applies
• Endorsements or standalone wreck removal cover may be needed
• Jurisdictional differences must be addressed at placement

Wreck removal has become one of the most unpredictable elements of marine casualty claims. Coverage structures must evolve alongside the shifting liability landscape.

The question isn’t whether wreck removal will remain a severity multiplier – it’s whether your clients’ coverage is built to respond when it does.

LIG Marine Underwriting

Contact us: (727) 578-2800 | Ask@LIGMarine.com

For insurance agents working with marine businesses, understanding the Longshore and Harbor Workers’ Compensation Act (LHWCA) is essential. This federal law has shaped the protection of thousands of waterfront workers for more than 100 years, and it continues to evolve today. But how did we get here?

From Legal Gap to Lifesaver: The Birth of the Longshore Act

In 1917, a Supreme Court decision (Southern Pacific Co. v. Jensen) ruled that states couldn’t provide workers’ compensation for injuries that occurred on navigable waters. That left a dangerous gap in coverage—until the Longshore Act was passed in 1927. The Act created a federal system to protect shipbuilders, harbor workers, and longshoremen.

Key Amendments That Changed the Game

Major updates in 1972 expanded coverage beyond vessels and docks to include adjacent areas, such as piers and marine terminals. Survivor benefits and maximum compensation rates were also improved.

In 1984, additional changes clarified who was (and wasn’t) covered. Recreational vessel workers under 65 feet, certain office personnel, and aquaculture workers were excluded if state comp laws protected them.

Adapting to a Changing Industry

In the 2000s, the Act was updated again to reflect shifts in maritime work. The 2009 American Recovery and Reinvestment Act expanded exclusions for recreational vessel repairers, after 10 years of lobbying led by the Marine Industries of South Florida. The 2009 expansion was then amended by rules published by the Office of Workers' Compensation Programs, released late in 2011. Then, in 2023, proposed regulations targeted employer penalties for failing to accurately report injuries—showing how the law continues to evolve in response to workplace realities.

Key Extensions of the Act

The reach of the LHWCA goes far beyond traditional longshore and harbor workers. Congress has extended its provisions to several other groups, adding layers of complexity to who’s actually covered:

• Defense Base Act (DBA): Covers civilian employees of U.S. government contractors working overseas.
• Outer Continental Shelf Lands Act (OCSLA): Covers workers involved in offshore exploration and development of natural resources—like oil rig crews.
• Nonappropriated Fund Instrumentalities Act (NAFIA): Applies to civilian employees of military-run services, such as base exchanges and recreational facilities.

Understanding who is covered is just as important as what is covered. Between special extensions, evolving definitions, and overlapping jurisdictions, navigating Longshore coverage isn’t always straightforward—especially for agents trying to do it alone.

For agents, the Longshore Act’s ongoing evolution means one thing ... 

Need help navigating it all? 

Have a Longshore risk to review?

Send submissions to Submit@LIGMarine.com or visit LIGMarine.com to connect with one of our Longshore experts.

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