# Professional Liability Insurance for delivery or hiring crews



## rockDAWG (Sep 6, 2006)

1. For those professional captains whose main source income is from delivery, and charge $300 to 1000 a day, do you carry your professional liability insurance for yourself? 

2. For those part time delivery captains, do you have your professional liability insurance or you intend to default to your personal umbrella insurance.

3. For those captains who is hiring a crew for cruising, do you have a specific crew insurance in your boat policy or you reply your own person umbrella policy.

We all hate this stuff, but ignoring it does not make it go away. How you do protect your nest egg?


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## brokesailor (Jan 12, 2008)

Great post Dawg! Dying to read some responses!


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## benesailor (Dec 27, 2012)

bump


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## FSMike (Jan 15, 2010)

Years ago when I used to do deliveries I didn't carry insurance, and nobody ever asked. I never damaged anything.


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## capta (Jun 27, 2011)

When I was making my living as a full time delivery captain, the vessel's insurance policy covered the vessel and crew. I would suggest that you not deliver an uninsured vessel; if they can't afford insurance, at least for the delivery, maybe they can't afford to pay you?
I had a contract that the owner or agent (bare boat company operations manager) had to sign. Simply put, I was responsible for any damage to the vessel on the voyage that was not covered in an "acts of God" clause such as running through crude oil at sea, a lightning strike or hitting something at night, etc. The contract made me a very popular delivery captain, even though I rarely had damage to pay for out of my pocket.
Keep in mind that most sailboats that you will deliver are not being delivered by their owners or captains because there are significant problems with the boat. For instance; one at the end of it's bareboat service. Do a quick visual survey of the boat upon boarding, noting on the contract any damage or problems, just like you do renting a car. Carry a very extensive tool kit, a sail sewing kit and lots of duct tape. (PM me if you'd like more detailed info, but be patient; internet here in FdF is terrible).
As for crew insurance, especially those sailing for experience (non-professionally), say on a cruising boat, again it should fall under the vessel's own policy, but there is an "element of risk" factor when choosing to undertake a crew position on a boat which an attorney told me laid most of the burden on the crew doing as directed by a competent officer. However, if some very stupid woman can put a cup of hot coffee between her legs and get rich by blaming someone else when SHE spills it, who knows? 
Good sailing.


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## Minnewaska (Feb 21, 2010)

I recall when I first learned that nearly no deliver Captain has their own insurance. Surprising. The owner buys a rider to their policy to insure the delivery. The insurance company typically wants a copy of their skipper's license and must have wanted some experience form, the latter I don't recall specifically. On the other hand, it isn't terribly expensive. I recall about $150 for a 900 mile trip. They do not add an additional charge for shorter coastal trips, but I still inform them to confirm coverage.


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## hellosailor (Apr 11, 2006)

dawg, at the risk of promoting risky behavior...One might consider forming a limited liability company (LLC) and having the company contract for the delivery. I think that would allow their employee to be shielded from individual suits other than _gross _negligence.

Form corporation, hire freelance skippers, keep a percent...money to be made here? Move over Avon lady?


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## Andrew Burton (Oct 22, 2012)

Having just read through the policy for my own boat, I notice there are provisions for hiring delivery skippers. It's a pretty common extra.

I've never heard of a delivery captain carrying insurance to deliver his client's boats. He'd have to get a separate policy for each boat; one policy wouldn't cover both a boat worth $30K on one trip and another with a dinghy worth that. And me having to buy a policy would mean a rate increase, costing an owner much more than merely getting a rider on his.

I've been in the business so long that I have a history with most insurance companies and can say to my client, "Just tell your agent that it's me delivering your boat." They usually get by with a minimal, if any, extra cost. I just got insurance for a client whose old wooden boat I'm delivering north from Central America. He couldn't find any insurance at all--even for himself--until I made a call.
This is one of the benefits of hiring a pro to do a delivery.


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## hellosailor (Apr 11, 2006)

"one policy wouldn't cover both a boat worth $30K on one trip and another with a dinghy worth that. "
Why not? If you are writing a professional liability coverage policy, you are going to write limits on the policy, mainly dollar limits.

My auto liability insurance is written based on what I own, but for what I don't own, it is strictly dollar based. If I get in a POS or a Lamborghini, either way, I'm covered based on my own liability limit. If the vehicle is worth more, or I do more damage, the insurer really doesn't care. Why should a delivery skipper's liability policy be any different? He's not buying insurance on the boat, he's buying it on his liability.


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## Silvio (Nov 10, 2010)

Hellosailor makes an important distinction between a boat policy and general liability policy. The general liability policy would cover the captain against actions against him/her, not necessarily for damage to the boat. For instance I would want a general liability policy to protect me if my actions caused an oil spill at a fuel dock while making a delivery for hire. I imagine that the dock owner's insurance would come after me personally and the boat owner's insurance company as well. The boat owner's insurance company would not want to be on the hook for my actions at the dock, and since there is no damage o the boat I can see where they would all look at me for liability. 

Just a thought.


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## Andrew Burton (Oct 22, 2012)

hellosailor said:


> dawg, at the risk of promoting risky behavior...One might consider forming a limited liability company (LLC) and having the company contract for the delivery. I think that would allow their employee to be shielded from individual suits other than _gross _negligence.
> 
> Form corporation, hire freelance skippers, keep a percent...money to be made here? Move over Avon lady?


That's been tried several times. The only one I heard of who made it work was Patrick Ellam back in the 70s when the bareboat companies were getting their boats from FL. 
Actually, I take that back. I think there's an outfit in the UK doing that; they may have gone under after losing a couple of boats. And I think there's a guy working for R&C in SA doing it. I understand they don't pay well enough to get really experienced people, but they may be a place to start.


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## hellosailor (Apr 11, 2006)

Andrew, dawg's question asked about delivery skippes protecting themselves, i.e. liability insurance. That is totally unaffected by whatever insurance the boat owner has, because even if the boat owner is fully insured? The insurance company will then proceed to sue the delivery skipper to get back everything they paid the owner.

That's the way it works. The only thing that will protect your assets, if you are the delivery captain, is professional liability insurance. Personally liability or umbrella coverage could exclude any business related activities, so you'd have to check for policy exclusions. And of course, it wouldn't necessarily be a business expense either.


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## Andrew Burton (Oct 22, 2012)

I guess I'm just very careful not to screw up...as you might have guessed reading some of my other advice about heading offshore.


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## Silvio (Nov 10, 2010)

Andrew, 
You are certainly entitled to your rant. Different folks have different approaches. I agree that there is a philosophical difference among sailors and many of us on Sailnet.

I am not a captain, delivery or otherwise. I do however own a business. My general liability insurance doesn't protect me so much as it protects my wife and children. It protects my family from losing our assets. I see it as necessary for being a professional in business where certain risks are mine to assume in return for which I am able to charge a fair market rate for my services. I doubt you will find many professionals such as doctors, engineers, attorneys, etc. practicing their profession without liability insurance. I don't see why a professional delivery captain would want to operate differently. I can think of thousands of reasons why insurance is a good idea for professionals but only the cost can I see as a negative. My $1M policy is almost a negligible operating expense. And as a business I count insurance as an operating expense that comes off the top before taxes.

It is my understanding that you can refuse to leave your vessel even if the USCG orders you off. I don't believe that you will be able to enjoy the benefits of having a captains license if you do though.

I guess what I'm saying is that I don't carry insurance to protect others, I carry it to protect me and my loved ones. 

To each our own I guess.


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## Andrew Burton (Oct 22, 2012)

As you say, Silvio; different approaches to life. I prefer to accept responsibility for what I do. And I suspect I don't have much in the way of assets that an insurance company would see profit in going after. Surprisingly enough, delivering boats hasn't made me rich!


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## Silvio (Nov 10, 2010)

Andrew Burton said:


> As you say, Silvio; different approaches to life. I prefer to accept responsibility for what I do. And I suspect I don't have much in the way of assets that an insurance company would see profit in going after. Surprisingly enough, delivering boats hasn't made me rich!


Well crap,
There goes my second career plans.


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## rockDAWG (Sep 6, 2006)

The reason i posted the questions is to learn how to minimize my exposure to ludicrous lawsuit. If I ask my lawyer, he will say: 

1. I don't want you to delivery for any boat for anyone with or without compensation.
2. I don't want you to crew for others
3. I don't wan to hire any crews unless you are in a LLC

If you don't follow my advise, I will double my fee when I need to defend you. In this type of scenario, even you win, you lose big time. Obviously, there is no way that I can follow his recommendation. They are absurd. But the liability is real. 

If you have two crews, you tell them tethered at all time at night and never go out on deck. You come up to the deck at night, he is missing. His family lawyer does some homework on your net worth. And decide to take legal action. 

Many of us are not like that. But the exposure is there. This will suck all the fun out of sailing. 

Therefore if there is a professional liability in place, I would be more comfortable. Architect, engineer, Physician, Nurse, pharmacist and etc have liability for their practices. Captains and owners should have it too if you want. 

I am just sayin'


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## Silvio (Nov 10, 2010)

Rockdawg,
I just realized that I started a thread very similar to yours. Sorry, I was trying to avoid hijacking your thread and may have inadvertently duplicated your original thought.


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## rockDAWG (Sep 6, 2006)

Silvio said:


> Rockdawg,
> I just realized that I started a thread very similar to yours. Sorry, I was trying to avoid hijacking your thread and may have inadvertently duplicated your original thought.


No problem. I think more people rise the concerns and understand our risk is better. Besides, my post is probably full of grammatical errors. If my proofreader at the office sees this. She will have all red ink over it. :laugher

I sucks in English and Poetry. hahaha.


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## Minnewaska (Feb 21, 2010)

Forming an LLC that is the contracting party, which you own and work for, will do absolutely nothing to reduce your liability. You are still responsible as Captain. 

A great point was made above about the owner's insurance trying to subrogate their loss against you, if you were the cause. You may want to ask for a waiver of subrogation from the insurance company. The owner can buy that feature, which limits the insurance company's options and, therefore, costs a bit more. 

I got a real chuckle thinking of this. The delivery Captain that I use for any passage of significance is way more experienced than I. Multiple trips per year, back and forth from the Caribbean. The insurance company should lower my rate, when he has the boat!!


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## Silvio (Nov 10, 2010)

Minnewaska said:


> ...
> I got a real chuckle thinking of this. The delivery Captain that I use for any passage of significance is way more experienced than I. Multiple trips per year, back and forth from the Caribbean. The insurance company should lower my rate, when he has the boat!!


You might give your insurance agent a call next time and see if they will!


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## JonEisberg (Dec 3, 2010)

Andrew Burton said:


> Just my opinion, but this discussion revolves around a sort of philosophical problem that I find a bit troubling. Please forgive me ranting.
> 
> ...[Snip]...


Excellent thoughts, Andrew - your take on this mirrors mine very closely...

This sort of bass-ackwards focus has become increasingly prevalent in recent years, and I definitely feel blessed to have gotten into the delivery trade long before such concerns were the primary priority...

I liken what's occurring in the delivery business to the phenomenon that has overtaken, and completely transformed, my 'real' vocation - photography - as well... Just as GPS/electronic charting has enabled pretty much anyone with a warm body to take a boat anywhere, the incredible advances in photographic technology and digital post-processing/manipulation have enabled virtually anyone with a decent eye to produce professional-quality results... I spent years learning the craft, and the nuances of how films like Kodachrome and Velvia reacted to light, at pretty much the same time I was getting the experience to acquire a CG 6-Passenger license... Of course, that's not the way it's done nowadays. Hand-held light meters have become as superfluous as sextants, there's no need to get it right in the camera anymore, mistakes can be corrected digitally afterwards, just as easily as a shot of bow thruster can save your ass after a completely blown approach, or cluelessness as to what the current alongside might be doing... (grin) As a result, you and I now find ourselves increasingly competing with many who may lack a deeper or harder-won understanding of the craft, or lack of a fuller understanding of all that they may not know...

I realize many who have chosen more conventional paths, would not understand yours and my views on a subject like insurance, thinking us reckless, or hopelessly naive... And, perhaps they're right... But, my eyes quickly glaze over when reading a thread about "Yacht Delivery Contracts - What to look for?", for example... Over 35 years running boats, and I have yet to ever offer or sign a 'Delivery Contract'... If my reputation, confirmed with a handshake, or my soothing voice on the telephone isn't good enough for the client, well... he should probably be looking elsewhere... (grin)

I don't know, I can't help wonder whether the OP may not really be cut out for our line of work... Funny, most everyone I know running boats simply "fell into the business" somewhere along the line, a surprisingly small percentage seem to have made a conscious decision to become a delivery captain...

Not to mention, I can't imagine anyone I really know and respect in the trade, uttering a sentence that begins with the words "Well, _my lawyer tells me_..."

On the other hand, perhaps guys like you and I are the real dinosaurs, and the wave of the future is delivery skippers beginning to learn our craft in law school, or a study of the nuance of the insurance industry...

Grin, bigtime...


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## hellosailor (Apr 11, 2006)

"But don't make getting liability insurance any kind of priority."
All well and good to compare philospphies of life but that wasn't the OP's question.

Let's suppose one of you top experts hits a deadhead at night, stuffs a foot wide hole in the hull and loses a cheap quarter million dollar 40'er. The owner is a nice guy but his wife is really pissed at you and files suit, saying it was irresponsible of you to sail at night when you couldn't see what was out there. She gets a jury to agree and you get screwed. Hey, sure, you did everything right and **** happens, but that also includes courts making the wrong decisions and now you're being held liable for a quarter million dollars, and also the loss of her prize winning pomeritzu dogs who last were seen going down with the boat. They were prize-winning breed stock and gifts from Leona Helmsley, valued at _another _hundred grand for the pair.

You're screwed. You will now lose 350,000 dollars, from your house, your retirement funds (they're not all inviolate), your own boat, whatever you've got. It doesn't matter how good or professional you were, folks get caught up in this stuff all the time and SOME folks would really rather just buy insurance than risk the loss.

It has nothing to do with how qualified you are, how responsible you are, how experienced you are. It has to deal solely with how you chose to _ensure _against risk of loss.

Solo delivery captains may be the last cowboys, riding off with just a horse and saddle. Much of the rest of the world? Isn't quite so brave.


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## JonEisberg (Dec 3, 2010)

hellosailor said:


> "But don't make getting liability insurance any kind of priority."
> All well and good to compare philospphies of life but that wasn't the OP's question.
> 
> Let's suppose one of you top experts hits a deadhead at night, stuffs a foot wide hole in the hull and loses a cheap quarter million dollar 40'er. The owner is a nice guy but his wife is really pissed at you and files suit, saying it was irresponsible of you to sail at night when you couldn't see what was out there. She gets a jury to agree and you get screwed. Hey, sure, you did everything right and **** happens, but that also includes courts making the wrong decisions and now you're being held liable for a quarter million dollars, and also the loss of her prize winning pomeritzu dogs who last were seen going down with the boat. They were prize-winning breed stock and gifts from Leona Helmsley, valued at _another _hundred grand for the pair.
> ...


You're absolutely correct, of course, and there is certainly a good case to be made for carrying liability insurance... My response was simply more to the general tone of Andrew's musings, rather than to the OP's query (who seems to be getting a bit ahead of himself in certain respects, by thinking of purchasing a life raft before owning a boat, for example (grin))

I've always viewed the delivery business as a surprisingly 'intimate' one, as you're assuming command of a possession that is very dear to most clients... Personally, I cannot imagine having my own boat delivered by anyone else, and there has to be an extraordinary amount of trust involved, on the part of both parties... I've been lucky, since deliveries have never represented my sole source of income, I've usually had the luxury to pass on deals that didn't 'feel right', or that I sensed might turn into a real PITA... As with most any profession, one develops the ability to sense the likelihood of a particular client being one that might best be avoided within the first minute of a phone conversation... One of the first things I learned getting started out, is to always go with my gut feeling in that respect...

Obviously, guys like Andrew and I are still operating by modes of 'responsible behavior' that no longer apply... We've both gotten away with it for decades, but I'm sure it's just a matter of time before I sink some client's million dollar baby, his own insurance refuses to cover the loss, and he turns to me for payback...

One thing I do have going for me that might help me avoid your scenario, however:

I would never, EVER run a boat with a pair of prize-winning Pomeritzus along for the ride... (grin)


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## Minnewaska (Feb 21, 2010)

JonEisberg said:


> .....I'm sure it's just a matter of time before I sink some client's million dollar baby, his own insurance refuses to cover the loss, and he turns to me for payback...


That's the rub. Even if the owner's insurance pays him, the insurance company may pursue you (subrogation) if you are the one that caused them the loss.


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## Minnewaska (Feb 21, 2010)

Andrew Burton said:


> If the lawyers want to get you, they will....


It does not have to be that way. It's a choice.


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## jimgo (Sep 12, 2011)

That's also where a good LLC makes sense. You have to run it properly, handle the finances properly, comply with all the (mostly straightforward) regulations, but it can keep the courts from "piercing the corporate veil" and coming after you personally. Think of it as another level of insurance. Sure, you may lose your business and all of its assets, but it lets you keep your own stuff, like your house. At least on the surface, it seems to make a lot of sense, but if you really want to get good advice, talk to a lawyer about it. Many will give you an short conversation for free or a minimal ($200-$500)charge.


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## Minnewaska (Feb 21, 2010)

jimgo said:


> That's also where a good LLC makes sense. You have to run it properly, handle the finances properly, comply with all the (mostly straightforward) regulations, but it can keep the courts from "piercing the corporate veil" and coming after you personally. Think of it as another level of insurance. Sure, you may lose your business and all of its assets, but it lets you keep your own stuff, like your house. At least on the surface, it seems to make a lot of sense, but if you really want to get good advice, talk to a lawyer about it. Many will give you an short conversation for free or a minimal ($200-$500)charge.


If you are suggesting that you establish an LLC that the owner contracts with and you are an employee of the LLC, it will not have any impact on your personal liability. I know this, as they are used for aircraft all the time. The pilots are not protected. They either need to be named insureds on the LLC policy or carry their own.

In the lawsuit, both the LLC will be named, which is protected to the extent of its assets, as well as the Captain will be named personally for their actions. The LLC only creates a "veil" if you're not there.


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## JonEisberg (Dec 3, 2010)

Minnewaska said:


> > Originally Posted by JonEisberg
> > .....I'm sure it's just a matter of time before I sink some client's million dollar baby, his own insurance refuses to cover the loss, and he turns to me for payback...
> 
> 
> That's the rub. Even if the owner's insurance pays him, the insurance company may pursue you (subrogation) if you are the one that caused them the loss.


Yup, another good point...

For over 20 years of shooting IndyCar racing for a corporate client, I was required to carry my own liability insurance. I was able to obtain an umbrella policy that covered all of my professional activities, so I was presumably covered in the kind of situation we're talking about...

After I stopped shooting racing, I kept the policy for another year or so... When the economy went into the dumper, and the delivery business along with it, I let the coverage lapse, it simply wasn't worth it, along with other business expenses such as the ad I was running in POWER & MOTORYACHT... Now that business seems to be picking up again, I may have to re-visit the issue...

However, my recent/current experience - one that is shared with virtually everyone else in my neighborhood - with insurance companies in the aftermath of Hurricane Sandy, is a sobering reminder that unless they happen to be in an unusually charitable mood, insurance companies are not in the business of "ensuring" _anything_... In this particular instance, I would have been ahead of the game had I carried no homeowner's insurance whatsoever for the past 20 years (my last claim was over 30 years ago), and "self-insured" instead... So, on some level, I remain unconvinced that a liability policy would afford a truly bulletproof guarantee in the event someone having no real understanding of boating/sailing becomes convinced I was truly negligent...

I'm afraid Andrew is correct, the insurance guys and their lawyers _ALWAYS_ win, in the end...

And, when they don't, we as taxpayers and policy holders will wind up bailing them out, anyway... (grin)


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## jameswilson29 (Aug 15, 2009)

Estate planning and asset protection planning are best done well in advance of any mishap.


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## caberg (Jul 26, 2012)

Liability insurance is cheap, comparatively speaking. Everyone who does anything with a risk of loss should carry it. Of course, to protect your own assets, but also for others. Insurance is not some newfangled idea.

If you're fully covered under an owner's policy, that works. You might have liability coverage, but I'd at least determine if that's the case.


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## caberg (Jul 26, 2012)

JonEisberg said:


> on some level, I remain unconvinced that a liability policy would afford a truly bulletproof guarantee ...


The Allstates of today are truly evil. There still are some good insurance companies out there.


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## Minnewaska (Feb 21, 2010)

JonEisberg said:


> .....insurance companies are not in the business of "ensuring" _anything_...
> 
> I'm afraid Andrew is correct, the insurance guys and their lawyers _ALWAYS_ win, in the end...


You're rightly pointing out the claims experience with many insurance companies. That is where a good agent/broker can help. Some pay out on a phone call, other argue everything. They know the difference and it is reflected in your premium. You decide which you prefer.

It is not necessary that they insurance company always wins. You just have to be properly protected with the proper carrier. Most that shop and buy their own insurance have absolutely no idea what they are doing. It would be like defending yourself in court.


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