Let’s say you operate a land-based business and you decide to hold a party for employees and customers aboard a dinner-cruise vessel. It’s basically a booze cruise.
You enter into a charter agreement with the vessel owner and during the party one of your guests is injured aboard the vessel. After treatment at a nearby hospital, you receive a letter from the guest’s attorney alleging the injury was your fault. After you calm down and stop calling your guest a few choice names, you do the prudent thing and turn the claim over to your insurance agent. He or she will tell you that since the vessel was not yours and is over 51 feet in length, you have absolutely no liability coverage for the claim.
How do you prevent this from happening?
First, it helps that you now know there’s an exclusion on your general liability policies for “non-owned watercraft more than 51 feet.” (Some policies only cover non-owned watercraft 27 feet and under.) If you want to charter a vessel more than 27 or 51 feet, make sure the vessel owner/operator has liability coverage (P&I) on the vessel with “liquor liability” coverage. Also make sure the limits of liability are high enough. Then, as part of the charter agreement, ask to have your company added as an additional insured on that policy.
When the charterer agrees to do this and the contract is ready to be reviewed, be sure to share it with your insurance agent and your lawyer so they can comment on the coverage. I realize that this is a pain in the neck, but believe me you'll be protected to the extent of the charterer’s insurance.
I recently landed a large client that owned its own tall ship but decided to charter another dinner-cruise vessel for a fundraiser. After the event, a guest said they allegedly had an injury. The client had no coverage. Their insurance agent knew about the event but failed to tell his client of the limited policy and lost a good customer as a result.
