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Insurance for freelance Captains?

Discussion in 'Yacht Captains' started by Islandtime, Sep 24, 2008.

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  1. Islandtime

    Islandtime New Member

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    Since incorporating my business as a freelance Captain, I have been running with the assumption that I am covered by the owner's insurance. I have even drawn up a liability waiver so that there is no misunderstanding that I do not have insurance. I looked into getting insured, and the closest policy I could find was somewhere near $20k! There does not seem to be a policy which covers a freelance Captain running different vessels each week. Has anyone had a different experience?
  2. Capt J

    Capt J Senior Member

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    As a freelance captain, I have never checked into other insurance. I have and do always fall underneath the owners insurance. In fact in the last year or two, all of the owners insurance companies have requested my resume and a copy of my license in order to cover me specifically for the delivery. I do a lot of deliveries where the owner has just purchased the yacht. The insurance companies also have requested my resume and license on file on most of the yachts that I manage, in the last few years. I have not worried about purchasing seperate insurance.
  3. CaptTom

    CaptTom Senior Member

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    As like Capt J, I have been insured under the yachts I have run for delivery or extended periods.
    But, when I do any type of hands-on training, typically on vessels from 30 to 60 feet, I have the owner sign a waiver to release me from any harm while onboard. Training usually is for several hours at a time, and mostly with the owner.
    I have tried to find insurance as a freelance captain, but no one has had it. Several insurance agents thought it was an interesting idea, but that was that.
    So get covered under the vessel's policy.
  4. Ken Bracewell

    Ken Bracewell Senior Member

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    Although I'm covered under the vessel's policy, I also carry an umbrella policy.
  5. aeronautic1

    aeronautic1 Member

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    Echo CaptJ

    I have to echo CaptJ's comment.

    I have been a contract captain since 1988. If you look at a vessel's binder, you will see that there is a provision for licensed captain to perform such tasks as delivery, sea trial et al. However, my contract also has a Hold Harmless clause and also specifies that the vessel's rider lists me as additional insured includingf property damage.

    I would consult your maritime attorney and make sure your contract protects you, and the owner from loss or damage.
  6. Islandtime

    Islandtime New Member

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    Good deal; it sounds like I'm doing the right thing. I'd be interested to hear more about that umbrella policy you purchased though.
  7. Ken Bracewell

    Ken Bracewell Senior Member

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    Just call the agent who handles your homeowners policy. They're pretty common .
  8. NYCAP123

    NYCAP123 Senior Member

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    As captain we would be covered under the boat's policy, but has anybody considered that the vessel may have a 10 or 20% deductable. In case anyone didn't think this was a serious business, you're looking at potential liability of a couple hundred thousand or more.:eek:
  9. CaptNeil

    CaptNeil Member

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    There is insurance out there that is called care custody and control. I have it and it cost about $3500 per year and covers up to $2,000,000.00 liability. The main reason I got it was that a lot of the policies that owners have do not cover environmental accidents. Basically fuel spills or a bilge pump blowing out oil.
    It is professional liability insurance much like a doctor, engineer or architect carries. If you do make a mistake you are covered. Money well spent I think.
  10. NYCAP123

    NYCAP123 Senior Member

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    What is the deductable on this policy?
  11. CaptNeil

    CaptNeil Member

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    I think it was $5,000.00. I 'd have to look to make sure.
  12. NYCAP123

    NYCAP123 Senior Member

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    You must do very well if you can afford to shell out $3,500 a year for a policy that carries a $5,000 deductable and you don't even own the boat. Most independent captains I know do this part-time and the few full-timers I know generally make less than 50K. I know you'll say it beats the alternative, but quite frankly if you cause a claim of more than several thousand dollars you're out of the business, bankrupt and probably ruined anyway. As an independent captain you risk your life and your fortune every time you step on board. If you're prone to negligence or afraid of risk this is not the business to be in.
  13. CaptNeil

    CaptNeil Member

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    I carry the insurance because I am on and off a lot of boats. I own property management company that takes care of several boats. I also run a charter fishing boat. I think that anyone who is in a business where you are in charge of million dollar pieces of property would be foolish to not spend the extra few thousand to 1. give yourself a piece of mind 2. make your services more attractive to customers and 3. give your company a professional appearance. If you have a good business model and charge accordingly the cost of the policy is covered. Otherwise you can be a fly by nighter and hope that that waiver clause in your contract will hold up in court.
  14. NYCAP123

    NYCAP123 Senior Member

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    Obviously you're a company that employs several people. Absolutely insurance is a prerequisite. You also have to cover workers comp and unemployment. Most independent captains however do it as a sideline and even those that do it full-time generally earn in the area of 50 to 75K a year before taxes if things are good. A few people on another thread suggested that a captain should only charge $250 per day. Working 5 days a week 50 weeks a year (which really isn't possible) that's $62,500. The reality at least up north is that he would earn maybe 1/2 that. That policy would represent over 5% of his annual gross and offer no real protection for his most likely claim which would be for scratched fiberglass, etc. (under $10,000). Now a policy covering say from $500 to $200,000 for say $500 a year would almost be doable, but I haven't seen many of those. BTW, you mentioned a comparison with doctors. You do realize that they have fled that profession because even they couldn't afford the malpractice insurance premiums and they really needed it. Now of course if you're moving around these 100+ footers you're dealing through a company probably like yours so it's a different situation than with the independents. You would hire the independent and he would operate under your policy. The guys moving the smaller boats just have to be real careful which is why more and more are leaving the profession.
  15. CaptNeil

    CaptNeil Member

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    Obviously you are wrong. I am a freelance captain that employs no one full time. I do hire a mate when doing transports. I saw an opportunity with the sagging economy to pick up the slack where owners began firing full time captains. I have a lot of friends in the business who are out of work and looking for a ride. These boats still need to be taken care of and the owners realize it. My company will make sure that all the scheduled maintenance is done on the boat, the boat is clean and a captain is available whenever the owners feel the need to go for a ride. If I am unavailable I work with several other captains that are capable of freelance day work. It's tough out there right now, but there are opportunities to make a decent living and still stay on the water as much as possible.

    I find your analysis quite trivial to say the least. Have you ever seen what the clean up bill for a single drop of diesel in the water is? I can tell you with the new clean water acts and "green marinas" you are going to see a lot more enforcement of the simple burp. As someone who runs the entire east coast and goes into a lot of ports, I know at some point I will run into an a-hole that has nothing better to do than make my life a living hell. I've seen it happen to others, and I don't want to be there without protection. Before you jump on board as a freelance, check the owner's insurance policy and I can almost guarantee you that fuel spills are not covered. Fines and clean up usually start at around $20K. Are you read for that?

    Islandtime asked the question if there was a more reasonable type of insurance. The short answer is yes there is. It's up to you to make the decision if it is worth it or not.
  16. NYCAP123

    NYCAP123 Senior Member

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    Do each of these captains and crew also pay $3500 premiums or does your policy cover them as well (in which case you are also responsible for their deductables). If you take a cut for referring a job to them you've accepted liability for their actions. Trust me cap I do not trivialize this. I do the same work you do and have been for over 20 years. I only wish there were a way to protect myself and still make a living. Does that make me "fly by night" by your standards? Maybe. I'm only putting my home and my retirement on the line if I screw up. Paying out an additional $8,500 a year ($3,500 premium + a $5,000 deductable) could push me close to bankruptcy. For the past 20 years I've operated knowing that I am just not allowed to screw up. Period. I applaud you for carrying insurance, but I believe you'll pay out (20) $5,000 claims long before you are liable for any $2,000,000 hit. If you are responsible for such a hit you're finished anyway. Remember (and I'm sure some lawyers will argue this point) you are liable for your negligent action. If you pour fuel in the water it's you. If the hose breaks it's the marina. If the boat sinks through no fault of yours it's the owner's. I happen to be one of the few full-time independent captains in this area and I don't see this type of policy as financially viable or worthwhile. Do you think the average part-time captain earning maybe $20,000 can afford to pay out $3,500 a year for a policy that leaves him on the hook for $5,000? (I assume these are the guys you referred to in the above quote). Capt. Neil, this is not trivial. If I were starting out today I wouldn't because there is far more money to be made on land without the financial and physical risks. That's also why I won't work for peanuts or live in sub-standard conditions. I totally understand the call of the sea, but if anybody gets into this business today for just that they're nuts.
  17. CaptNeil

    CaptNeil Member

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    Here's the deal with insurance as I see it. It is necessary in this day and age of litigious society. There are too many people out there that are ready willing and able to prosper off of the appearance of misfortune of others. I have it to not only protect myself, but to protect the interest of the owners I deal with. When you are skippering a multi million dollar vessel you are a target of plying eyes. I am positive that there are envious environmental zealots out there waiting to see a potential problem they can exploit.

    The fuel deal was a single example of what you are responsible. How many people out there can honestly say they haven't had diesel from a high speed pump splash in the water? According to the USCG that is illegal. Whether you were pumping it or a deckhand was you are responsible.

    How about a little oil in the bilge from the last oil change that accidently dripped down? One drop of oil creates a huge sheen when the bilge kicks on. USCG says this is illegal.

    Who has been cleaning some rust off and squirted WD40 and created a sheen? Illegal also.

    Most of the time these are considered acceptable to anyone who has ever been around a boat, but in some cases you run into an extremist nut that will take these to the edge. Do you have the time money and patients to deal with the lawyer's world?

    Do I think that people earning $20k per year are fly by nighters, yes. They are taking jobs away from well qualified professionals that are really trying to earn a living. If you can live on $20k a year then I salute you, but I have a mortgage, car payments, kids etc...

    One other thing to consider before going the six pak route and hanging your shingle is the fact that you ultimately are responsible for the property. One tiny mistake and you are liable for millions of dollars worth of someone else's personal property. I know this has been a cavalier profession that seems like a nice way to make a living, but this is the 21st century. You can go on thinking that you are not going to make a mistake, but **** happens and sometimes you can't control it.

    As far as what you are talking about the payment per year it is only $3,500.00 per year. Your deductible only comes into play if you have a claim. I don't think $3,500 is that bad for the piece of mind. As a freelancer I am on a lot of different boats. None of which seem to be perfectly maintained. However once I step foot and take control everything is my responsibility. I think that as a professional you need to have professional insurance. JMHO.

    Oh yeah when I refer a captain I will pay him directly. He will be covered under my policy as a part time employee. I however do not have any full time employees. It works out great this way.
  18. NYCAP123

    NYCAP123 Senior Member

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    First, if you re-read my post you will understand that neither do I hold a 6 pack license nor am I one of the part-timers earning $20K. Yes, I would love not to be competing with those folks but they are a fact of life. Some of them are also very qualified captains though, but simply can't earn a full-time living in this profession. You also seem to know and work with some of them
    I also think you should recheck your insurance policy because very few such policies would allow you to cover various other unnamed captains who occasionally do work for you. As for the litigious persons looking for deep pockets believe me, they are looking for the boat's owner. We are just collateral damage. You should also be aware that oil drips leaking from an engine can't get bilged overboard unless you permit it to be outside of the engine boxes. That would be negligent. Speaking of negligence I don't allow fuel from any pump to overflow and when fueling I keep several oil pads on hand to protect against any such occurrence because allowing that would be negligence.
    Do you really think that I have made it 20 years in this profession with never having a claim made against me for damage of any kind by considering it a cavalier profession? And yes, I too captain, maintain or teach on well over 100 boats a year. And BTW ***t doesn't happen. It is caused, and if it lands outside the pot someones been negligent.
    I hate to burst your bubble on this one, but if you are paying them directly as a part-time or full-time employee you'd best be having them fill out a W-4 and remit income tax, and cover them with unemployment and worker's comp or their liability in a minor accident will be the least of your problems. If you're hiring them as independent contractors don't forget the 1099 and oh yeah, they just fell outside your policy.
    You see, no matter how hard you try you can never make being an independent captain free of risk from litigious individuals. In this area of the business we live very much by our wits with the understanding that our first mistake is likely to be our last.
  19. CaptNeil

    CaptNeil Member

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    I don't doubt your experience or question it. This was not a remark aimed at you. I do work with some who are semi retired and others who are out of work. It's a tough business. I read your bio and realize that you are not in this category.

    Pads or no pads it happens. I don't know of any person who has ever been on the water and has never seen a drop of fuel spilled. What I am telling you is that this is professional insurance and it covers negligence.

    Again I don't discount your ability or experience. I agree that something causes error, but you as a master are responsible no matter what or who caused the problem. I've grown up on the water and have seen everything from gill netting in the bay with my dad at 5 years old to running 20' sees around Cape Hatteras. **** does happen and it always lands on the skippers shoulders.

    Yes they are paid as a part time employee. They have to fill out a a W-4 and have taxes withdrawn. If you don't like the arrangement then you don't have to work. 1099's are not acceptable. I do however pay gross up. My clients pay a premium for our services but they are justified and actually save money in the short run until they put good captains back to work.
  20. NYCAP123

    NYCAP123 Senior Member

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    Thank you cap. The point I make is not that you are wrong to carry the insurance you carry and it is certainly not to say I'm perfect (long way from that). It's that the insurance we really need doesn't exist, at least not at a price that can realisticly be afforded by most independent captains. Every time I step on a boat the thought of my potential liability never leaves my mind. This is why captains have been known to take their lives after causing accidents. They know their lives are finished. Insurance premiums, the litigous society and boats that are touted as all but running themselves may well bring an end to the independent boat captain. If I were a new guy coming in or someone only earning a few bucks part-time I'd give this a lot of thought before stepping on board. Even at my stage I consider getting out every time my license comes up for renewal and every time a week of storms cuts my paycheck to zero.