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question about boat insurance liability

Jul 20, 2011
125
1974 Macgregor 22 SoCal - dry storage
Interested in doing a partnership with somebody once I got my boat. We'd split the monthly expenses and he would not have any equity in the boat. We'll buy our own liability insurance (I think $300k is the minimum for most marinas.)

Question: if he invites somebody else out sailing and he or his guest falls overboard and drowns, am I liable for it? what's the legality in that? Does it offer more protection for me if the partner also has equity in the boat?
thanks
 

Gunni

.
Mar 16, 2010
5,937
Beneteau 411 Oceanis Annapolis
Question: if he invites somebody else out sailing and he or his guest falls overboard and drowns, am I liable for it?
Depends on how many Philadelphia lawyers are involved, how photogenic the widows and orphan children, and the depth of your pockets! :wahwah: A very elaborate partnership agreement that specifies the partner's acknowledgement of the other's limited liability would offer some protection. But what you are describing sounds more like a charter agreement which would have you carrying the insurance and adding it to his use fees. You would be responsible for keeping the boat in good and safe working order...likely more extra costs to you that you would need to pass on. Like any good charter manager you would want to vet his use and activity and be prepared to refuse service if he looks like he is a liability to life, property, and your insurance coverage. Frankly most recreational boat partnerships are not worth the hassle.
 
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Jan 11, 2014
7,634
Sabre 362 113 Fair Haven, NY
The partnerships that I know are Limited Liability Corporations (LLC). I'm not an attorney, however, my limited understanding of these partnerships is that they essentially achieve what you want. The boat is owned by the LLC, there is a managing partner, and prescribed methods for selling shares, buying others out, and dissolving the corporation and disposing of its assets.

Check with an attorney who sails.
 
Jul 27, 2011
4,528
Bavaria 38E Alamitos Bay
Interested in doing a partnership with somebody once I got my boat. We'd split the monthly expenses and he would not have any equity in the boat. We'll buy our own liability insurance (I think $300k is the minimum for most marinas.)

Question: if he invites somebody else out sailing and he or his guest falls overboard and drowns, am I liable for it? what's the legality in that? Does it offer more protection for me if the partner also has equity in the boat?
thanks
In one "partnership" boat I owned with two friends some time ago (who are still friends), it took some effort to find an insurance company that would sell us insurance as three-party owners in the boat, etc. Ultimately, we found BOATUS which had specialized policies for that. Don't know if they still do under Geico. But--ask them.
 
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Nov 8, 2010
11,385
Beneteau First 36.7 & 260 Minneapolis MN & Bayfield WI
Something bad happens, I guarantee you get sued.

All the agreements and insurance might help you survive it. But trust me, you'll get sued.

I personally cannot image a set of circumstances that would make me think it would be a good idea. Too many down-sides.
 
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May 12, 2004
1,317
Hunter Cherubini 30 New Port Richey
You are probably better off asking an insurance broker or a lawyer than this list serve.
I'm not so sure about the broker, (they sell insurance), but definitely consult a lawyer, (they sell advice). One specializing in maritime law, if possible. I think the best advice you are going to get here is what Gunni said.
Frankly most recreational boat partnerships are not worth the hassle.
Good luck.
 

reworb

.
Apr 22, 2011
234
Beneteau 311 Ft Myers Beach
I'm a lawyer. My advise is to consult a lawyer in YOUR STATE. These issues vary from state to state.
 
Jun 8, 2004
8,844
-na -NA Anywhere USA
Before purchasing a boat with another person, there are several things to consider. First, do you know and trust that person. Secondly you will have to choose when to sail as that can be an issue, secondly, who is going to take care of the maintenance, just one or both and that has led to sticky issues. Then if there is any damage to the boat, who is responsible. Then are you folks going to get others to perform the work. This has to be worked out first because if not, can lead to trouble down the road. As a dealer I advised against it unless going into a charter company where the company has personnel to take care of the boats. There are advantages going that route.

REworb is correct about contacting an attorney in your state as that would have jurisdiction if something should occur but away from state territorial waters is a different matter. That attorney should have experience in maritime issues. Frankly in most cases a partnership never has worked and led to trouble. What ever you do, have it in writing making sure you are able to obtain insurance.
 

CarlN

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Jan 4, 2009
576
Ketch 55 Bristol, RI
All good advice about getting professional advice from insurance company and possibly lawyer. But they will certainly tell you that there are risks.

You will almost certainly be named in any lawsuit involving the boat - even if you use an LLC. It's standard procedure to cast a wide net looking for sources of money.

1. Be sure the boat policy covers each of you as individuals as well as any corporate entity. This usually costs nothing extra.

2. Have an umbrella policy - usually from the same company that insures your car and or house. These only cost about $200 per million of liability coverage. It kicks in if the liability suit exceeds the regular insurance. More importantly, the insurance company lawyers will pay for the defense. My boat is under my umbrella policy even though it's insured with a different company than my house. I had to send them a copy of the boat policy showing basic liability coverage for their files. Umbrella policies don't usually cover "business" activities. So make sure the boat partnership is covered.
 
Jul 27, 2011
4,528
Bavaria 38E Alamitos Bay
There seem to be two mini-threads here on the partnership question: 1) Is a boat partnership, or having boat partners, ever really a good idea? 2) What is one's ultimate liability when a partner in a boat, and does it even extend to accidents that happen when the boat is being used by the other partners and you're not aboard? The second one has been commented on, and I agree that all owners would likely be sued, so one would need coverage for that eventuality.

Once again, it's all about risk and if you know and trust the judgement of your boat partner and his or her skill, then being a partner in a boat can be successful. By that I mean, when the partners part in the end they're still friends and where one partner has not suffered from careless acts of the other(s). Having once been a partner in two boats sequentially for a period of 9 years with guys still my friends, I know a little about how it can work with fairly large $$$ savings for each partner, respectively.

1) IMHO, partners should not be strangers to each other; rather, they should be friends known reasonably well to one another and who plan to use the boat in similar ways; who have similar living situations, such as all being in good marriages or other stable (couple) relationships. With that, one lowers the risk that something extraneous like a divorce and/or new "friend" enters the mix and "upsets" things. Thus, the "significant others" should also be supportive of the arrangement.

2) The owners should have boating experience and know at least most of the facts about what boats cost to own.

3) Each owner should be able to support the cost of the boat individually for some period of time, say 6 mo, or more. This is to prevent pressure for a "fire sale" if one of the partners loses his job or has some other kind of financial crisis that impacts his ability to keep up with his portion of the routine costs, such as the slip payments.

4) To the above end, I'd definitely recommend avoiding an expensive, if mortgaged or financed, boat for a partner set; find one that can be bought outright by the partners. You do not want boat costs to compete too visibly (i.e., high monthly expenditures) with other financial needs of the families. Ultimately, it is a "play thing" that takes a total backseat to vital issues like children, if any, and their needs, etc. I believe it is too risky to bet on partners, even as I describe above, to help pay for an expensive (recreational) boat that you cannot afford on your own at least for some brief period. The commitment (i.e., to a mortgage) is too long and too hard to "graciously" escape.

5) The partners should have a written agreement (that each will respect) that should include most importantly (after the insurance carrier & policy are settled): a) how routine expenses will be divided, how upkeep on the boat will be divided, and how usage will be divided (to avoid conflicts); b) how to deal with a severely damaged boat where insurance does not completely cover what might need be done; c) statement of each partner's personal responsibility after use [i.e., such as dumping the holding tank; fixing what the user broke (e.g., grill) or replacing what he lost (e.g., winch handle) that was not due to a maintenance failure or to normal wear and tear]; d) how to end the partner arrangement and to either sell the boat to a third party, or to the other partner(s). (For example, the remaining partners might get the boat for less $$ than what it would be priced at w/ a broker, etc., for a third-party sale.)

On usage, it was decided that each partner (in the case of two partners) should get half of the holiday periods, such as 3-day weekends, per year, and nominally half of the weekends. But in practice it was always pretty open as we wanted to use the boat as much as possible. We talked to each other about upcoming plans for the boat, and kept a calendar and a usage log. We adopted what I called "the principle of equitable usage." In short, whoever was "ahead" on usage for the year would yield to the other partner if a "conflict" appeared.

The final tip. Always remember that in a good 50-50% arrangement each partner is saving thousands of dollars each year over sole ownership with very little noticeable (at least in our case) restriction on planned or unplanned usage. So if you somehow get to the point where it seems that you're doing more than half of the work, and getting steamed about it, just say to yourself. "I'd still be down here doing this work if I were the sole owner of this boat!":biggrin:

Of course, if you want to see a comedic version of the stereotypical outcome of friends going partners in a boat, watch the Dick Van Dyke episode: "The Ballad of the Betty Lou." It's hilarious!:laugh::laugh:

http://www.imdb.com/title/tt0559814/plotsummary
 
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Jul 20, 2011
125
1974 Macgregor 22 SoCal - dry storage
Thanks for all the replies. What I have in mind is more like renting out the boat half time of the month and we split the monthly expense 50/50. The boat will be a catalina 22 of the 70's vintage, so under $3k value. I'll be the sole owner and I'll take care of all maintenance, so I guess I shouldn't call it a boat partnership really, sorry about the confusion.
I was in something similar last year, except I was the renter. Boat was a catalina 30 and since the owner rarely had time to use it, so he rented it out to 3 individuals, each one gets one week. Owner took care of all maintenace, insurance, etc. We didn't have to buy any equity in the boat, just signed a lease form and pay each month, lease was for 6 months. Sadly, he sold the boat.

So what I want to do is similar to that, except it's just two people. My only concerned is that if he or his guest gets hurt and sues without me being onboard, will I still be liable? Sounds like I will.
 
Jan 19, 2010
9,899
Hunter 26 Charleston
:confused:

Is there a market for such a thing? It sounds like you are thinking more along the lines of a limited access charter business. I can see the attraction of a longer term lease for a Catalina 30 but a Catalina 22 is a small boat without any amenities. More like camping. Why limit it and just charter it out with a standard charter agreement. I guess if you can make it work ... go for it.

My guess is, that for a few hundred dollars, you could buy a $3M liability insurance clause. I have something like that on a vacation rent house that I own. Put the boat in an LLC just for added protection.
 
Jul 20, 2011
125
1974 Macgregor 22 SoCal - dry storage
:confused:

Is there a market for such a thing? It sounds like you are thinking more along the lines of a limited access charter business. I can see the attraction of a longer term lease for a Catalina 30 but a Catalina 22 is a small boat without any amenities. More like camping. Why limit it and just charter it out with a standard charter agreement. I guess if you can make it work ... go for it.

My guess is, that for a few hundred dollars, you could buy a $3M liability insurance clause. I have something like that on a vacation rent house that I own. Put the boat in an LLC just for added protection.
Not trying to turn it into a business at the moment, although it crossed my mind. just looking for some help on the monthly slip fee and bottom cleaning, since the boat is just sitting there most of the time.
 
Jan 19, 2010
9,899
Hunter 26 Charleston
Does the boat have a trailer? And if so doss your marina allow "dry slips".

A dry slip is when you leave it at the marina on the trailer with the mast up. Usually much less expensive, launch and go in ten min, boat does not get beat up by wave action at the slip, no need for bottom paint, etc.
 
Jun 8, 2004
8,844
-na -NA Anywhere USA
Now that we know the boat you are thinking about, this is a 40 year old boat and I would highly suggest that you have it looked at closely as you may be biting off more that you can chew if there are any issues which could cost you a lot. The first of course is the swing keel attachment, hull, swing keel cable and brake winch, mast, rudder and so on. Look at that boat with a fine tooth comb. Advice from rgranger would be advisable on this boat but you would have to purchase a trailer with it. Use to be a Catalina dealer and took the small boats to the Annapolis boat shows.

Ron Frisosky and I designed a low style trailer for the Catalina 22 Sport with swing keel offered by Road King which will fit perfectly for the older style Catalina 22 swing keel as they are basically identical hulls. I could motor it onto the trailer which is unusual, launch and retrieve so easily on a short ramp as it sits low and so on. The only caution is to secure the boat at the winch stand with the additional safety chain and also a strap over the cockpit area of the boat onto the trailer. Ron was surprised when I motored the first one up onto the trailer but of course I had a 8 hp on the back end. Very rare for a sailboat trailer like that one. Ron is now sailing in Heaven.
 
Jan 11, 2014
7,634
Sabre 362 113 Fair Haven, NY
Nothing will protect you from getting sued. A release may or may not help you prevail if you get sued.