[PaThomas123]

If one was to buy a boat and put it in a charter fleet that is covered by the charter fleets Insurance what would the personal liability to the actual owner be if someone is hurt onboard or damages another boat or property when the boat is out on a charter? Thanks for any info

 

[Minnewaska]

That's going to be too complicated to answer. It will depend on the corporate structure and jurisdiction for starters. Then, there is the form over substance issues, such as whether a corporation can really protect you.

Keep the idea of insurance and liability very separate. Liability doesn't care if you have insurance. Insurance only covers certain specific liabilities.

 

[hellosailor]

What Minne said.

IF you are placing it outside the US you need to consult an attorney and get their answers in writing, them confirm them.

Same thing in the US, but here you can ask if a state is a "vicarious liability" state, in which case the vehicle (vessel) owner has liability regardless of how many intermediaries may be involved. A good (high and expensive) insurance policy can help that, and your charterer can probably obtain that as a commercial policy cheaper than you can, assuming the various contracts place that burden on them, and they don't slip out of it by bankruptcy or non-payment of premium or some other means.

You're right to worry. Find that lawyer.

They'll probably suggest forming a limited liability corporation (LLC) or some other "firewall" besides private direct ownership of the boat, which may have other advantages as well.

 

[PaThomas123]

Thanks hellosailor the LLC is a great idea I use one for rental properties now
and didn't even think about that again Thanks

 

[gedaggett]

I can shed a little light on this thought it differs based on the set up of the charter company and who has what expressed responsibilities.

I am the director of fleet maintenance for a Sailboat Lease Share company in Chicago. We have boats in our system that are not owned by us by we lease them. Here are a couple of things that you need to know and must be established so you know what is your responsibility.

1. Who is responsible for the maintenance and up keep of the boat. For us the owner is responsible for all maintenance and making sure the boat is in ship shape. Our insurance company checks the boat out but if something happens as a result of negligence, poor maintenance or disrepair on the part of the owner then I am sure that our insurance company will go after them.

2. What kind of policy does the charter company carry. Does it cover only negligence attributed to their employee or does it cover "Acts of God", damage done by customers, damage done by other parties. Also what are their limits. (Our insurance may cover our boats but then go after the customer if a they knowingly go out in a small craft advisory or other situation that should have been deemed as hazardous to the property or persons.

It is also my opinion that you should check out the captains that they use for charter or what qualifications they require of those who will be sailing your boat. It may not be a bad idea to make sure you have a gap policy if you can find someone to write it that will cover your own losses and make up for any ground to protect yourself. Placing the boat in trust or L.L.C. is not a bad idea either as it is one more cushion between you and a law suit.

That's my 2 cents, but I am not a Lawyer but play one on TV.......

 

[Minnewaska]

An LLC is not a bad idea, but don't bet your life on it's protection. Most misunderstand what a corporate veil actually does. Essentially, it protects the owners of a corporation from the corporation's liabilities. IOW, if you own a share of Pepsi, you can't be sued, if they poison someone.

However, if you both own the LLC and manage it, which is almost always the case with these little LLC's that own boats, you aren't going to be sued as a shareholder, you're goiing to be sued individually as the manager (ie operator and/or decision maker) and the coporate veil doesn't help insulate your liability at all.

 

[Omatako]

Same thing in the US, but here you can ask if a state is a "vicarious liability" state, in which case the vehicle (vessel) owner has liability regardless of how many intermediaries may be involved.

So let me understand this.

A car is sold by a Ford dealer to a leasing house. The leasing house leases it to a fast foods company. The company gives the car to an employee as a part of his salary package. The employee, with the company's permission allows his wife to drive it. She has an accident and someone is killed (not the wife, at least not right away ).

The leasing company is vicariously liable for the death of a bystander???

Wow!! Must be a nightmare for someone like Penske Leasing (who lease 200,000 vehicles)

 

[Minnewaska]

....The leasing company is vicariously liable for the death of a bystander???....

The answer used to technically be, yes. I'm pretty sure the last state to have vicarious liability laws was NY and they dropped them just a few years ago.

They were originally intended to hold the back seat owner liable for making their chauffeur drive recklessly, assuming only the hired help would get in trouble. They were never intended for the lease scenario, but someone sued someone under the technicality of the law and won.

 

[wfish11]

In general lawyers sue everyone in these kinds of situations in the hopes of getting someone. If you can't afford to defend yourself or if you don't have an insurance co. that's on the hook with you, your in trouble. Corporations that are obviously only set up to limit liability will probably be set aside as "sham" corporations and you'll be in the apple barrel anyway. The only safe thing here is to make the leasing company responsible for any liability you may incur due to their actions. Do this in writing, But if they go belly up you're back on the hook.

Have a lawyer experienced in this and the country the boat will be in, look at the documents and make changes and recommendations. Major Co.s avoid this by having teams of lawyers to keep them covered on this stuff and even then they get burned once in a while, but seldom does a judge set aside a giant corporation as a sham corp. Either have no assets worth getting so the lawyers won't get paid or get coverage.

 

[danvon]

wfish is absolutely right. The plaintiffs' lawyers will drag anyone associated with the enterprise who they think might have any money/insurance into the suit, regardless of whether they could reasonably have had any fault whatsoever. That means you or your insurance company would have the happy opportunity to spend 5, maybe 6 figures on legal fees, even if you get out completely.

And God help you if you are in a state with joint and several liability (meaning that even if you are found to be only 1% at fault, you could be on the hook for the whole thing if they can't get it from the parties who bore the majority of the blame, i.e. a defunct charter company).

 

[aeventyr60]

I had a small boat that I put into a charter companies fleet. I had my BoatUS insurance amended to meet the charter companies requirements.

 

[Minnewaska]

I had a small boat that I put into a charter companies fleet. I had my BoatUS insurance amended to meet the charter companies requirements.

That's a good reference. Just be careful that the charter company's requirements are likely designed to keep their tail out of jail. Not necessarily yours.