Charter Boat Insurance

(Everything you need to know - and more.)


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 passengers safe. 

Maritime law requires charter boat businesses to meet very specific insurance coverage requirements. While you may be talented at the helm of a boat, navigating the rocky waters of maritime insurance can be a challenge.

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What Are Charter Boat Business Requirements?

Starting up 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 US 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 a maritime insurance policy specifically designed for charter boat businesses.

What Does Charter Boat Insurance Cover?

The two main components of charter boat insurance coverage are:

  1. Protection and indemnity coverage
  2. Hull and machinery coverage

Protection and indemnity coverage is typically known as liability insurance. It covers any bodily injury or third-party property damage that 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. 

You can elect named-risk or all-risk coverage. The purpose of this coverage is to ensure that you can repair or replace your boat when necessary, and thus can continue your business operation.

How Much Charter Boat Insurance Do I Need?

Because you have invested a large sum of money in your charter boat business, make sure your investment is suitably covered by an inclusive insurance policy. Be sure to completely assess your risks and coverage needs when shopping around for your policy.

When it comes to liability coverage, most insurance professionals agree that purchasing as much coverage as possible is advisable. In today’s litigious society, an injury lawsuit can prove to be expensive enough to hurt your business. 

Having high liability limits will ensure that you have enough coverage if one or more people are injured in an accident. You can also consider an umbrella liability insurance policy to further raise your liability coverage. Check with your agent to see which option is the best for your needs and risks.

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 a few phrases commonly used in the industry:

  • Full-time charter coverage: This type of commercial insurance 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 that 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 US Coast Guard certified.
  • Shore excursion coverage: This is an option that 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.

Is Charter Boat Insurance Expensive?

The cost of insuring one or more charter boats can be high. However, the coverage is necessary, not only because it is required by law, but because without it, a single accident could potentially bankrupt your business. 

Because your insurance policy will be one of your business’s main expenses, it is important that you choose your carrier and policy options carefully.


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The Policy Has to Match the User

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.

Use this independent agent matching tool to find the best insurance plan in your area. Provide some details about what you’re looking for, and this technology will recommend the best agents for your needs. Any information you provide will be sent only to the agents you pick.

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