L.l.c.?

[CarlF]

Even though your view is commonly held, at least among non-lawyers and others who believe that the US justice system operates the way it "should", I am skeptical that an owner can escape liability for negligent maintenance and hiring practices that contribute to a loss, .

My lawyer agrees with you. He felt it was only worth using an LLC for tax accounting purposes for a charter business. Maybe you also gain a bit of liability protection but maybe not. He felt it worked best if a yacht management company made all decisions regarding boat maintenance without even consulting the owner. But even then, “piercing the corporate veil” is common. He felt that a better option if not chartering the boat was usually to hold the boat in the owners name and have a $5M umbrella excess liability policy on the home owners insurance (which costs little) on top of $2M liability in the boat policy.

 

[MYTraveler]

Carl, I too have chosen the umbrella policy route, but as I understand it, there is no relationship between one's net worth and an adequate coverage amount. In other words, whether your net worth is $1M or $10M or $100M, if your are at fault in an accident resulting in, say $6M of liability, you are still exposed for the additional $1M. For example, consider three guys who each carry $5M of liability insurance, and each is at fault in a separate accident causing $6M of losses, with the only difference between the three being their net worths, which are, hypothetically, $1M, $10M and $100M, respectively, In that circumstance, the guy with a $1M net worth is wiped out, despite having done the socially responsible thing by maintaining significant coverage.

So, instead of looking to one's net worth, it seems to me that the adequacy of coverage is a function of how much damage one might negligently inflict. I settled on $15M, even knowing that I occasionally cross paths with $100M vessels. Oddly, I expected the marginal cost of additional coverage to decrease, but in shopping for coverage, that was not my experience (and I have a squeaky clean loss history).

 

[mvweebles]

Yeah, I get insurance discounts for both experience and tickets, OUPV, 50t then 100 ton. My initial sea time was all commercial, tankers, bulk cargo and a passenger ship. (Norwegian Merchant Marine) The USCG loved it as it was all documented in my Sea Time Logbook)



I have also worked in aviation as B747 Captain, but never looked down my nose and ridiculed younger guys, with lesser tickets flying smaller planes calling them nickel and dime pilots or holding nickel and dime licenses.

We all started somewhere and we have all been low time as well as learning, whether airborne or on the water. Mutual respect.

I certainly understand your point, but in the case of lower level USCG licenses, sea time is mostly self-reported, so there are a relatively large number of "captains" who have very little practical experience and passed the exam by taking a 2-week cram course. "Nuckel and dime" may not have been the choice of words I'd use, but I definitely draw a distinction between holding a license and having experience.

While I'm not closely familiar with pilots' licenses, my sense is that flight-time documentation requirements are much more closely scrutinized.

While everyone has to start somewhere, sure seems like a lot of "captains" want to jump the line a bit with their USCG license credentials. There is a lot of puffery out there on the docks.

Peter
(Past USCG 100T Master)

 

[CarlF]

Carl, I too have chosen the umbrella policy route, but as I understand it, there is no relationship between one's net worth.

I agree that net worth does not factor in. My insurance agent suggested that what works for you is that the insurance companies pay for the defense and will fight very hard to not lose $5M. They will reach an agreement with the other side before trial with the threat that they can otherwise drag the thing out for a decade. Or win a lower judgement since the other side always bears some fault. Juries evidently don’t feel much sympathy or outrage for a guy whose yacht got scratched by another yacht.

The umbrella policies are inexpensive because they hardly ever come into play. My agent could only think of two times in his career. One involved the insured operating an 18th century canon in Concord Massachusetts while dressed as a British Red Coat to commemorate the start of the American Revolution.

I decided that $5M (plus $2M in the policy) was the right risk/cost balance for me but that’s a personal decision. Nothing wrong with going higher.

 

[psneeld]

The words "nickle and dime" were used...

this is what I added and maybe insurance companies are just smart enough to know it...

"In the commercial world pretty much anything from 100 ton down but OUPVs are a dime a dozen."

Which I realize wasn't punctuated well but was meant to say that just getting an OUPV nowadays is not necessarily easy but yes some relatively easy to document sea time, a few hundred dollars and a cram course will probably get you one.

Many of my students did just want to say they spent enough time on the water to earn the title "captain" and in the old days had the pretty wall certificates. I didn't have the heart to remind them the "O" in OUPV is for operator, not captain...

Just kidding... many of them by the end of the course realized just what really it entails to be a good captain and many left the course actually a bit humbled and said they would try and keep learning the "hands on" info they were exposed to.

 

[Cold Duck]

In Kona Hawaii it's almost impossible to get a slip unless the boat is already a LLC so the slip goes with the boat. If not, there's a waiting list with about a 20 year wait and the slip must be given up when the boat under normal ownership is sold and given to the next on the list. So, needless to say, almost all boats in the harbor are under LLC. Special circumstance but an import issue in Kona.

 

[Shrew]

2. If You go to the effort to obtain a "Captain's License " and something goes wrong, or someone gets injured aboard Your boat or by your boat, are You held to a higher standard as a Captain than just a regular boat owner as far as liability?

Col Regs are Cole Reg's. Either you followed them or you didn't. To contend that a licensed captain is held to a higher standard is to infer that recreational boaters are not subject to adhering to Col Reg's.

Both licensed and recreational boaters are required to understand Col Reg's, however it is only the professionals who are tested. That doesn't mean that recreational boaters get to use the "But I didn't know" defense.

When an accident occurs, responsible is assigned to those that didn't follow the published procedure.

 

[bowball]

Carl, I too have chosen the umbrella policy route, but as I understand it, there is no relationship between one's net worth and an adequate coverage amount. In other words, whether your net worth is $1M or $10M or $100M, if your are at fault in an accident resulting in, say $6M of liability, you are still exposed for the additional $1M. For example, consider three guys who each carry $5M of liability insurance, and each is at fault in a separate accident causing $6M of losses, with the only difference between the three being their net worths, which are, hypothetically, $1M, $10M and $100M, respectively, In that circumstance, the guy with a $1M net worth is wiped out, despite having done the socially responsible thing by maintaining significant coverage.

So, instead of looking to one's net worth, it seems to me that the adequacy of coverage is a function of how much damage one might negligently inflict. I settled on $15M, even knowing that I occasionally cross paths with $100M vessels. Oddly, I expected the marginal cost of additional coverage to decrease, but in shopping for coverage, that was not my experience (and I have a squeaky clean loss history).

Agree in general but there are factors where net worth should be considered, I believe.

First, the damages of things like death etc aren't objective numbers, unlike property damage, and lawsuits could easily go up to the maximum of insurance limits, unless the individual is high net worth where they might pursue higher damages.
Second, there is an element of risk aversion involved, as to what a high but not outlier damage award can do to one's quality of life. Jeff Bezos will more likely be sued for a higher than normal dollar amount of damages if they have a subjective element to them, and he can more easily self insure and won't be affected even by extreme awards.