An apparatus and method for protecting against the problems associated with heave of a floating drilling rig are disclosed. The disclosed invention is a unique inline compensator in which a plurality of cylinders housed within a tubular housing and a plurality of low pressure and high pressure accumulators function together to provide a system for compensating for heave in the event a primary heave compensation system fails or becomes inoperative. The typical inline compensator of the present invention utilizes a plurality of hydraulic cylinders that act in opposite directions and that have different piston areas such that the piston rods of the cylinders are extended or retracted at different pressure levels to account for heave. The typical inline compensator of the present invention is self-contained and compact enough to fit in the limited space available on a floating drilling structure. Further, a pair of inline compensators of the present invention can be utilized with coiled tubing operations. In such a case, the inline compensators will not interfere with the tooling necessary to conduct the coiled tubing operations.