Charity or Charter?

[Rick Warner]

Ok, here's the scenario: your sailing friend has taken part in a church (or school or local charity) auction by providing a 'sunset cruise' as part of the bidding for different items and services. No money has changed hands for the skipper and the high bidder is expecting a family evening out come summertime. As the time draws near, the skipper starts to wonder if he has taken on unwanted liability along with his eager passingers. He wonders if he is providing a cruise for payment even though he is not licensed to do so. His wife assures him that all is ok because it is all for a charity and he has not received any payment himself. The payment/donation went to a non profit third party and this sort of thing is done all the time. Does the skipper have any cause for concern?

 

[Don]

Yes

Arguably, a defense to liability could include consideration that the skipper was not compensated, however, he (she) does have paying passengers. More to the point, there is absolute liability regardless of whether the passengers are paying or your aunt and uncle, children, parents, best friends, fraternity brothers, neighbors, etc...if you get my drift.Don

 

[Miles]

Hmmm...

Well, it sounds like the high bidder is a paying passenger (just not paying YOU directly). I hope our Coast Guard has better things to do than hassle you for not having a 6 pack license under these circumstances but you never know...The bigger issue is the liability in a civil suit if something should go terribly wrong. I wouldn't count on a USCGS ticket to shield you from that. You might want pose the question to your insurance company/agent just the way you did here and see what they say since they are the ones who are covering your liability. If they say you (or your "friend") is covered for the sunset cruise I wouldn't worry too much about the license. Just my humble opinion...P.S. Chances are you'll have a great time with no problems!

 

[Peggie Hall/Head Mistress]

Call your boat insurance co

Ask them if you need--and, if so, can get--a rider to cover a one-time event. If you don't already have a personal umbrella liability policy, you should... you're at risk from some fool every time you take your boat out, and for a lot more than the few hundred thousand included in your boat insuance policy...today you can get sued for millions by someone who runs into you at 2 am while you're sitting on the hook in an anchorage, or the parents of the kid selling Girl Scout cookies who trips over her own feet on your front doorstep. Doesn't matter whether you're at fault, some people make a living suing. Personal umbrella policies protect you from any suit on land or afloat and cost very little. I pay less than $200/yr for $2 million. Between your boat insurance and a personal liability umbrella, you should be well protected against any disaster that might occur during your charity outing.

 

[Don]

To add my 2 cents..

Most likely your guests are not paying passengers as they will be taking a tax deduction for their winning "bid". The tax treatment of their "payment" really classifies the type for most purposes. Unless the bid amount is somehow allocated part to "services/goods" which you receive, and part to "tax donation" which the charity recevies, the payment is a donation and you're taking them for a boat ride because you're a good fella. It's just like the aunt/uncle someone else mentioned. That should cover the license/paid captain issue. The liability issue, however, is the same as for anyone else on your boat at anytime, except for maybe an uninvited intruder (and there are cases where a robber has even prevailed against a property owner!) Everyone should have a significant umbrella policy unless they have basically no assets, i.e., they are "judgment proof".(Related point: you can probably deduct the cost of the trip as a charitable deduction, e.g., fuel, an iota of r&m, food and beverage, etc, depending on how aggressive you are at tax time.)