Small business owners can turn a hobby into a way of life when they start a charter boat company. If you are starting a business to share your love of the open water for a profit, you should think about what kind of insurance you need to carry to keep you and your business and your passengers safe.
Charter boat businesses have very unique insurance needs. While you may be talented at the helm of a boat, navigating the rocky waters of commercial boat insurance can be a challenge. An independent insurance agent can help you find the right charter boat insurance.
Why Do I Need Charter Boat Insurance?
Starting a charter boat business requires a large initial investment and sound strategic planning. If your charter boat can carry more than six passengers, the vessel must be certified by the U.S. Coast Guard before it can be used for business purposes.
To operate a charter boat, you must have a captain’s license and should be certified in first aid and CPR. Finally, you will need to obtain commercial boat insurance specifically designed for charter boat businesses.
You can get charter boat insurance from both traditional insurance providers and companies that specialize in boat and marine insurance.
What Does Charter Boat Insurance Cover?
The two main components of charter boat insurance coverage are:
- Protection and indemnity coverage
- Hull and machinery coverage
Protection and indemnity coverage is typically known as liability insurance. It covers any bodily injury or third-party property damage you may cause while operating your boat.
It also provides coverage for legal fees and court costs if your business should be sued due to an accident or injury. The main purpose of this insurance is to protect your business from financial ruin if you are sued.
Hull and machinery coverage compensates you for damage to the vessel, including the engine, navigation equipment, deck machinery, and electronics. It applies when your boat sustains loss or damage after a collision, fire, theft, vandalism, or a destructive weather event.
Charter boat insurance may also include coverage for excess liability, lost cargo, pollution and wreckage clean-up, equipment rentals, personal property, and more.
What Charter Boat Insurance Coverage Options Do I Have?
There are many different kinds of charter boat businesses, like companies that provide scenic tours and fishing excursions. Likewise, there are many variations in insurance needs and coverage types.
When discussing charter boat insurance coverage and options, you may come across unfamiliar industry terms. A general understanding of these terms can help you discuss policy options with an insurance agent.
Here are some phrases commonly used in the industry:
- Full-time charter coverage: This type of commercial boat coverage allows for year-round coverage, including day trips and extended charters.
- Part-time charter coverage: This is a modification of a personal pleasure craft insurance policy that allows owners of yachts to use their boats commercially as charter boats for a set number of days a year. Most policies allow for 10 to 20 days of coverage per year.
- Jones Act/paid crew coverage: The Jones Act, also known as the Merchant Marine Act of 1920, requires every member of the crew to be individually covered for liability if they sustain an injury while on board. Some insurance companies require the names of all crew members aboard each vessel before it departs. This can make things tricky when it comes to last-minute hires or pick-up crews.
- Bareboat charter coverage: This is a special type of boat rental insurance coverage that you will need if another person operates your boat and you are not on board. Anyone chartering your boat must sign a statement absolving your business from liability in the event of an accident or injury. Bareboat coverage policies will usually limit the number of people who can be aboard the boat during the charter run.
- Six-pack charter coverage: This is full-time commercial charter boat coverage designed specifically for boats carrying no more than six people at a time. These boats are not required to be U.S. Coast Guard certified.
- Shore excursion coverage: This option can be added to your protection and indemnity insurance to provide liability coverage for your customers before and after they step onto the boat. Without this additional coverage, you would not have liability protection if a customer were to slip and fall immediately after exiting the vessel unless it was covered under your business insurance plan.
An independent insurance agent in your area can help you determine exactly what type of coverage best protects your unique charter boat business.
How Much Does Charter Boat Insurance Cost?
The cost of charter boat insurance will vary depending on a variety of factors, such as:
- Age and specifications of the boat
- Size of the boat and the number of passengers it holds
- Intended use of the boat, such as the amount of distance it’s expected to travel and the locations where it may stop
- Experience, safety record, and claims history of the policyholder
- Coverage types and limits of the policy
Charter boat insurance costs will likely increase as your business grows. You'll pay far less insuring a single charter fishing boat than a company with multiple boats or a large fleet.
How Can an Independent Insurance Agent Help Me Get a Quote for Charter Boat Insurance?
Your charter boat business will have unique coverage needs based on the boat (or boats) you are insuring, the number of employees you have, the services you are providing to your customers, and the risks you may face due to operating a business on the water.
You will, therefore, need a specialized charter boat insurance policy that is suitable for your particular business model.
An independent insurance agent can help you find the best charter boat insurance in your area. Independent agents can work with multiple insurance companies so you can compare quotes and make the best choice for your needs and budget.
