Charter Boat Insurance
Charter boat insurance encompasses at least a dozen different types of commercial boat uses, but all are based on having paying passengers on board. The providing of services to paying customers on what could be dangerous situations presents a high stakes proposition for the insurer and an expensive needed service for the commercial vessel owner. Among the many types of charter vessels are dinner cruise vessels, dive boats, sunset cruises and whale watching charters, sport fishing, bareboat and six-pack charters. Even the paddle boats cruising the Mississippi require charter boat insurance to do business. Behind the scenes of many people having a good time on larger watercraft vessels are business negotiations regarding the liability of the activity underway.
Maritime law requires commercial passenger boat operators to be responsible for all that happens onboard during the use of his vessel. That responsibility, whether for six person aboard a six-pack commercial passenger boat or thirty onboard a luxury yacht, requires excellent liability and property coverage. Without charter boat insurance, or enough coverage of the same, an operator could face years of litigation in court, essentially wiping a lifetime of investment in the business. Like any other kind of insurance, the more coverage an owner wants, the more expensive it becomes, and understanding the needed coverage is a key to making the right decision. This coverage begins with a look at the vessel itself. In difficult times, when the world seems to be collapsing around you, remember these words of the psalmist: "God is our refuge and strength, a very present help in trouble, therefore we will not fear, though the earth be removed and though the mountain be carried into the midst of the sea." (Psalm 46:1, 2)
Coverage is meant to help an operator get back to profitability after damage has occurred to the watercraft. Things like a fire on board, striking another vessel or object and even sinking are all included in this kind of policy which gives an option of either covering parts at actual value or agreed value. This coverage will include major damage to engines (although not due to neglect) also to electronics and other mechanical items that are part of boat or ship operations. Within all these items covered, an operator can choose how much of this he wants to be covered, allowing a lowering of the policy. In fact, if an operator chooses to have lower coverage on the hull and machinery, it may allow more coverage for some other important clauses in the charter boat insurance policy that would appear to be quite important to a charter operator. Coverage on the hull and machinery are either covered for all risk or named hazards. The all risk is certainly a more inclusive coverage, but it is more expensive.
Because of the shape of some commercial passenger vessels in terms of age, and the sub-par qualifications of crew and staff, limits can be put on the amount of coverage an operator can secure. Whether it is a come-on or reality, insurance providers are quick to say that when it comes to charter boat insurance, the most coverage someone needs is the amount a provider will grant. Unlike car insurance where all persons riding in a car are covered by a medical clause, commercial passenger vessels are covered by marine policies that pay by the incident. This is called P&I (property and indemnity) insurance which is a broad liability clause in the charter policy. This covers an incident aboard the vessel that affects one or more passengers. IN most cases, these policies cover up to five hundred thousand dollars per incident.
But those aren't the only issues that a commercial passenger boat owner faces; it gets a lot more complicated. Think about a vessel sinking off the shore of an exclusive resort and there is a large discharge of fuel oil in the water which is not uncommon and the cleanup can be quite expensive. And what about shore excursions and the issues of paying for passenger mishaps when a charter boat takes a group to a port for a tour and someone breaks their leg on a curb? P&I coverage in charter boat insurance only covers those port excursions in which they are accompanied by members of the charter company. When passengers are dropped off at a port and left on their own for activity are not covered and must have another type of charter boat insurance that is, expectedly, much more expensive. Crew members are required under law to have insurance coverage not on a per incident basis but on each member and it's the charter owner as to whether to cover personal affects that are often lost on board.
Many maritime experts suggest charter owners take a look at the option of getting breach of warranty coverage. This particular addendum to charter boat insurance would come into play in a scenario such as this: A large chartered sail boat carrying fifteen passengers and four crew members is forced by a sudden storm to go south twenty nautical miles off the agreed to course and find shelter in an island cove. In the race to get to shore in unfamiliar waters, the skipper guides to boat over a coral reef ripping the hull open. All passengers and crew get to shore safely, but the vessel goes down in forty feet of water. Since the sailboat was not in agreed to waters on the policy agreement, the ship is not covered under the normal P&I policy. A breach of warranty coverage addendum to the policy would provide for coverage anyway.
Commercial Boat InsuranceCommercial boat insurance is required from the hundreds of ferries that shuttle from shore to shore to the cruise ships and fishing charters as well as the whale watching boats and any other vessels that are used to haul passengers for profit. The liability is immense and the range of possible scenarios on the water can almost boggle the imagination, yet for the right price an indemnity company will take on the risk of insuring the trip to that hot fishing spot or that secluded island paradise or just to another work day on the mainland. But is not just about hauling passengers, it's about the lobster boats and the clammers and the vessels just used for hauling stuff up and down the Mississippi and other major rivers as well as the tugboats that push the giants in and out of the ports of major cities. Maritime laws, usually state mandated, require that every commercial boat, watercraft or ship be covered with the type of insurance that will at least cover basic civil liability in the event of accidents. For this lens, a look at the smaller commercial boat insurance issues will be discussed.
Business related boats, as opposed to ships that sail the oceans, are covered by policies that are in two parts. Policies state that their intent is to get the owner back out in the water as soon as possible. These policies are always broken down into two distinct portions: hull and mechanical and then P&I or protection and indemnity. Hull and mechanical cover the coverage of structure of the boat and mechanical refers to the engine and its main related systems. P&I insurance is third part insurance to protect the owner from incidents that occur onboard his vessel(s). Any agent attempting to sell a commercial boat insurance policy that does not include both components of a marine policy does the owner a great disservice.
The hull portion of the commercial boat insurance coverage usually blankets all equipment mounted on the boat such as horn, lights, radios, safety equipment and can also cover trailers that might transfer the craft. The mechanical portion will cover catastrophic engine failure through broken shafts, pistons, etc., so long as it cannot be traced to mechanical neglect. Explosions, fires and other causes of engine failure would also be included on the coverage. Torrential oceans and seas and even grand lakes can be terrifying for the one is a small craft, but Jesus, the Great Shepherd will His children to another place when life becomes chaotic if they will allow Him: "He maketh me to lie down in green pastures; He leadeth me beside the still waters, He restoreth my soul..." (Psalm 23:2-3)
One of the characteristics of commercial boat insurance when it comes to the protection and indemnity portion of a marine policy is that coverage pays by the incident, not by the vessel being covered in a blanket policy. While there are mandated minimums for certain components of the P&I insurance portion of the commercial boat insurance coverage, owners are certainly encourages to buy higher amounts of liability insurance. Companies providing hull and mechanical and P&I coverage are able to deny high amounts of protection to those owners with vessels in less than pristine condition. And because incidents putting in jeopardy passenger and crew safety can amount to hundreds of thousands or even millions of dollars in judgments, the mantra across the board with marine insurance experts is to get as much policy coverage as a provider will allow. The many possible scenarios under which a boat's owner could find him being used are enough to make any sane operator pay almost anything within a profit margin to get the full amount.
One of the most recent possibilities of liability that has arisen was non-existent years ago, but due to the ever increasing focus on the environment, this is another worry for the operator. A boat sinking near a populated or wildlife sensitive area has the almost certain chance of discharging a large amount of fuel oil or gasoline into the water. Not only is this a pr problem for the operator of the boat, but if he has commercial boat insurance, it also is a very expensive cleanup bill for his insurance carrier. Without the extra coverage in the P&I portion of the policy this possibility becomes an economic headache for the boat operator; cleanup of this sort is not an hour's operation. If the vessel under consideration is of the passenger carrying type, the P&I considerations begin to mount. First, there are the many possibilities for onboard mishaps that demand a high liability protection, as well as medical indemnity considerations. If the boat is a charter and passengers are taken to another port for guided tours, etc., the operator must be covered for incidents occurring under his supervision, and if it is a "drop them off and see you later" deal, that is a whole other liability issue.
But the commercial boat insurance issues don't end there. Consider items lost overboard, and cameras that have been stolen, perhaps jewelry gone missing while on board. While many passengers may have homeowner's insurance to cover such possibilities, there will be a few that will complain to the highest decibel level that the boat operator is responsible, and so coverage for these issues is suggested. Here is another issue perhaps not considered. Most commercial watercraft owners are covered for a certain geographic area, but if a sudden storm or some other unexpected issue arises and it is forced off course for safety concerns, an incident occurring in those unapproved waters may negate any of the boat's coverage. Marine experts also advise the purchase breach of warranty coverage for these very kinds of possibilities. It's no wonder that fishing charter cost so much!