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Running one or more charter boats can be an amazing way to make a living – there’s nothing better than being out
on the water and helping your guests enjoy that experience, too. But it’s important to protect yourself with the right
insurance coverage.
Before you meet with an insurance broker to have them craft a policy, it may be helpful to understand some basic
risks and the types of policies to consider.
As you may know, there are two types of boats for hire, frequently referred to as crewed and uncrewed charters. In
both scenarios, you need comprehensive hull coverage, as well as liability protection.
The hull coverage safeguards your vessel, while the liability insures against personal injury or property loss suffered by
those on board or by someone not on your vessel but involved in an incident with it (perhaps someone standing on a
dock before launch or on another watercraft that you strike).

Crew included

As the name implies, when a captain and other staff is provided during a voyage, this is considered a crewed charter.
You may have only one boat and one location, or you may operate a fleet from multiple locations. Regardless of your
company’s size, once you have onboard workers, there are requirements you must follow.
The captain must have a license for the type of water being traveled, the size and type of watercraft being
used and the maximum number of passengers who might be carried.
If you plan to have more than twelve passengers, your boat must be inspected and certified by Transport
Canada.
As a business owner, you may be surprised to learn that your charter boat employees must be covered by provincial
or federal workers’ compensation insurance. Anyone who earns a living by working in a regular part-time or full-time
schedule may be eligible. Depending on the situation, an injured or ill passenger vessel crew member may receive
payment to cover medical and living expenses (including rent, utilities and food), and in certain instances in select
provinces, compensation for any pain and suffering or other non-economic damages.
As a passenger vessel owner, you are also expected to get liability insurance, to the tune of $250,000 per passenger,
whether the charter is crewed or not. Norton Fulbright, attorneys at law, advise vessel owners to increase that
amount to $350,000 per passenger to cover their actual exposure to the claim. While Transport Canada sets the
maximum limit for all passenger vessels based on tonnage, the vessel owner can set a lower number to control his
insurance costs, but must be mindful to never exceed that limit to avoid exposure.
Of course, there are many additional elements of your charter business that require protection, but an insurance
broker with both marine and business insurance experience can help you identify any and all exposures beyond the
basic vessel, liability and policies. Such coverage may include insurance for onboard supplies, food services, ticket or
parking facilities, and fishing or recreation equipment.

Uncrewed is not without risk

If you are simply providing the boat and a renter is acting as skipper, this is called a uncrewed charter (also known as
a bareboat charter). This changes but does not eliminate your risks.
You will still need your own comprehensive hull coverage and liability insurance. Although renters assume their own
costs of liability, this responsibility should be clearly stipulated in writing and expressly accepted before the trip. A
lawyer who is familiar with these types of charter liabilities can draft a waiver you should require each passenger to
sign. This agreement may be key to protecting your business in a lawsuit.
You can also encourage or require renters to purchase additional insurance as a condition of reserving the boat. This
is coverage intended to protect the renter, but it also means you are less likely to get into a dispute with your
customers if an incident or cancellation does occur.
Some policies to consider:
Skipper’s liability insurance – This is triggered when a renter driving the watercraft causes damage that is in
excess of the vessel’s hull coverage.
Travel cancellation insurance – This policy reimburses renters for the charter cost if they must cancel after
the allowable cancellation date, due to illness or another acceptable reason.
Deposit insurance – Many renters are surprised to learn that every passenger aboard a barefoot charter is
liable for damage, even if it was caused by only one person. Deposit insurance protects the entire group.

Sharing losses

Even on a crewed charter, and especially on a barefoot charter, it might not be easy to establish who is responsible for
damage or injury. To assure that the right party is assigned liability, you should:

  • Establish reporting processes with your crew, if you have one
  • Document all standard safety procedures and preventive maintenance
  • Perform a complete inspection of your vessel before and after each trip, ideally before your passengers leave
    the dock area
  • Confirm signatures on passenger liability forms\
  • Provide a quick overview of vessel features for all passengers and the skipper
  • Reinforce the requirements for, and proper usage of, any flotation devices on board

Ultimately, if you do face a claim, anything that shows you have taken reasonable, expected precautions and
proactively addressed potential hazards is to your benefit.