The Importance of a Separate Watercraft Liability Policy

Some businesses use watercraft in their daily operations. Professionals that use watercraft for any purpose should not rely on general liability insurance to protect them from boat-related lawsuits, since this policy excludes coverage for most watercraft-related claims. Watercraft liability is a necessity for these cases. 

General Liability Exclusions

Most general liability policies contain an exclusion under Bodily Injury and Property Damage Liability. The exclusion eliminates coverage for bodily injury or property damage arising out of the ownership, maintenance or use of any watercraft that any of the insureds own or operate. It also excludes claims arising out of any watercraft that the insureds rent, borrow or give the responsibility to someone else.

The watercraft exclusion applies to the boat operator as well as anyone who is supervising or monitoring that person. 

Non-Owned Watercraft

If the watercraft isn’t owned by any insured, to be covered by general liability the watercraft must be less than the length specified in the policy. Generally, the size restriction is 26 feet. It will depend on the specific policy and/or added coverages. 

Non-owned watercraft are covered only if they are not used to transport people or property for a charge. For instance, suppose you rent a boat for a business function and invite five people along for a ride. If you decide to charge each guest $25 to help with the cost of the rental and one of the guests becomes injured on the boat and demands compensation, the claim will not be covered if you are not equipped with watercraft liability. 

Contractual Liability

Does your firm ever rent boats? Sometimes the rental contract requires you to indemnify the rental firm for any bodily injury or property damage you cause to a third party while using the boat. What if you accidentally injure someone or damage someone’s property while operating the rented boat and the injured party seeks restitution? 

A watercraft rental agreement may hold you responsible for any physical damage you cause to the watercraft itself during the term of the rental agreement. Such damage is not covered by a general liability policy. This is because liability policies exclude property damage to property you own, rent or occupy. It also excludes damage to property in your care, custody or control. If your business owns or rents a boat for any purpose, it is in the business’s best interest to secure proper watercraft liability. 

About Arroyo Insurance Services

Arroyo Insurance Services was officially established in 1986, but we have roots dating back to before 1950. One of California’s leading client-oriented and independently owned agencies, we have over 140 employees with a combined experience of over 450 years, spread across 11 locations. We are committed to providing the best insurance and risk management services at the most competitive premiums, and backing it with hands-on service tailored to our customers’ needs. For more information on how we can mitigate your risks, contact us today at (877) 220-4769.