For the last 15 years or so I have entertained customer's and fellow
employees on my boat. I have recently decided to take a trip from the
Chesapeake to NYC and my company has offered to cover the fuel expense
if I were to make myself and the boat available for employee and
customer outings while there.

In the past I have asked my insurance providers if I would be covered
under these circumstances. They always indicated that provided that I
was not a charter and I made no profit from the expense reimbursement I
would be covered.

I have just been told by a Boat U.S. insurance underwriter that if I
were reimbursed by the company for fuel expense only that this is
considered business use and I would not be covered.

I know literally scores of people who do this regularly and have done
so for years. My question is:

Can this be correct? Are there other insurance companies that have a
more realistic definition of business use? Are there any suggestions
for getting around this?

On 21 May 2006 16:45:37 -0700, "Fog Dog" wrote:

For the last 15 years or so I have entertained customer's and fellow
employees on my boat. I have recently decided to take a trip from the
Chesapeake to NYC and my company has offered to cover the fuel expense
if I were to make myself and the boat available for employee and
customer outings while there.

In the past I have asked my insurance providers if I would be covered
under these circumstances. They always indicated that provided that I
was not a charter and I made no profit from the expense reimbursement I
would be covered.

I have just been told by a Boat U.S. insurance underwriter that if I
were reimbursed by the company for fuel expense only that this is
considered business use and I would not be covered.

I know literally scores of people who do this regularly and have done
so for years. My question is:

Can this be correct? Are there other insurance companies that have a
more realistic definition of business use? Are there any suggestions
for getting around this?

It sounds like you are, in fact, chartering the boat to the company for the
cost of fuel. I'd want your company to provide liability insurance also.

In fact, I just wouldn't do it.
--
'Til next time,

John H

******************************************
***** Have a Spectacular Day! *****
******************************************

Fog Dog wrote:
For the last 15 years or so I have entertained customer's and fellow
employees on my boat. I have recently decided to take a trip from the
Chesapeake to NYC and my company has offered to cover the fuel expense
if I were to make myself and the boat available for employee and
customer outings while there.

In the past I have asked my insurance providers if I would be covered
under these circumstances. They always indicated that provided that I
was not a charter and I made no profit from the expense reimbursement I
would be covered.

I have just been told by a Boat U.S. insurance underwriter that if I
were reimbursed by the company for fuel expense only that this is
considered business use and I would not be covered.

I know literally scores of people who do this regularly and have done
so for years. My question is:

Can this be correct? Are there other insurance companies that have a
more realistic definition of business use? Are there any suggestions
for getting around this?


Odds are probably 99 in a 100 that you could "get away" with doing
this, but should that other 1% come up I think you would be screwed in
a major way. You won't need your insurance unless something happens-
but in this age of exorbitant and punitive legal judgments your
insurance company has a perfectly legitimate and valid "out" in this
situation. Of course, if something happens you could lie like a rug and
hope the investigators don't look too hard at the situation- but once
again if there are hundreds of thousands or even millions of dollars
involved you can be pretty sure the insurance company is going to look
at the situation *very* carefully.

Essential facts: Your *employer* (double red flag) is going to
reimburse you for expenses (iow: compensate you) if you will make your
boat available when and where they specify. Your employer will expect
you to take people who may or may not be known to you for sightseeing
tours or other sorts of boatrides. (This is a lot different situation
than you inviting one of your personal clients out on your boat at a
time and under circumstances of your own choosing and without
compensation).

If you aren't licensed for a minimum of OUPV then insurance is a moot
point- you're operating illegally if you take passengers for
compensation of any kind. In fact, you can't even accept charitable
donations in exchange for a boat ride unless you are licensed. The
determining questions: "Would you have taken Mr. and Mrs. Plaintiff for
a boat ride on that afternoon if they had *not* agreed in advance to
pay $XXX to the American XYZ Association for the privilege?" and (to
Mr. and Mrs. Plaintiff) "Would you have any reason to expect that the
soon-to-be-thoroughly screwed defendant would have invited you aboard
his boat for any reason *except* in response to your donation to the
XYZ Association?" Unless you can make a believable case that the answer
would be "yes", you're accepting compensation for your services and the
fact that you're passing the right of collection off to a third party
is of no consequence.

I'd expect the company to provide the liabilty insurance, and it's
unlikely that they will find anybody to write it unless you're
licensed.

Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.

Fog Dog wrote:
Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.

I'm certainly not an any sort of attorney nor am I an expert in the
subtleties of maritime law, but I'll share my personal and general
understanding.

Until a few years ago, it was actually illegal for a group of friends
out doing some casual fishing to "kick in" and help the boat owner
refuel at the end of the day. That didn't prevent it from being a
common practice, however, and the regulations were eventually relaxed
to permit non-paying passengers to voluntariily contribute toward fuel
costs, ice, bait, or other expenses (beer!) associated with a fishing
trip. If the friends aboard for the fishing trip or other general
boating adventure happen to be your fellow employees, that shouldn't
make any difference. People you work with are routinely going to be
among your "friends".

I think you're fine when you invite a client or prospective client out
for an afternoon on the boat- but a dedicated nitpicking.
trouble-making, ambulance chasing attorney might see it otherwise. Is
there any expectation, stated or implied, that the client will favor
your company with an order or with an increased volume of business in
exchange for the boat ride? If so, then you may be stepping onto a
slippery slope. The fact that you "expense" the lunch and the fuel is
pretty iffy, and could be used to establish a business purpose for the
use of the boat.

As far as inviting your sales crew out on the boat; I have done much
the same in years past but it has always been a strictly social event.
If you use a boat ride as a "spiff" for a certain level of performance
rather than just extending a general invitation to your entire staff
you might be flirting with trouble. Once again, I think you're hanging
out a mile by expensing fuel or any other costs back to your company.
After all, if there is no business purpose for the use of the boat why
in the world would your company be willing to remiburse you for the
expense? In fact, your company accountant needs to establish that there
*is* a business use for the boat in order to pay our expense voucher.
That could be ugly- the plaintiff or the insurance company calling your
own accountant to the stand to establish that you most certainly
considered the boat trip to be business related, as you had turned in a
claim for a business related expense.

I'd ask the CEO for a raise, (based solely on being a wonderful
employee and not in any way related to the ownership of a boat), and
ditch the expense vouchers for fuel. Your wages are just as deductible
as the expenses as far as the company is concerned, and it gets you a
little farther from the hook in case something goes wrong.

On 21 May 2006 20:13:36 -0700, "
wrote:

I'd ask the CEO for a raise, (based solely on being a wonderful
employee and not in any way related to the ownership of a boat), and
ditch the expense vouchers for fuel. Your wages are just as deductible
as the expenses as far as the company is concerned, and it gets you a
little farther from the hook in case something goes wrong.

I was going to suggest something similar but structured as a bonus
instead.

"Fog Dog" wrote in message
oups.com...
Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.



Have your attorney draw up a contract that includes a hold harmless clause
(in your favor) and have the company owner sign it. I would also ask to be
named as additional insured on their policy for the days you will be hosting
company events on your boat.

JimH wrote:
"Fog Dog" wrote in message
oups.com...
Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.



Have your attorney draw up a contract that includes a hold harmless clause
(in your favor) and have the company owner sign it. I would also ask to be
named as additional insured on their policy for the days you will be hosting
company events on your boat.


Can you be "held harmless" from the consequences of actions that you
knew, or should have known, are illegal? That's part of the insurance
companies position here, they refuse to indemnify a policy holder for
consequences of illegal activity.

wrote in message
ups.com...

JimH wrote:
"Fog Dog" wrote in message
oups.com...
Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.



Have your attorney draw up a contract that includes a hold harmless
clause
(in your favor) and have the company owner sign it. I would also ask to
be
named as additional insured on their policy for the days you will be
hosting
company events on your boat.


Can you be "held harmless" from the consequences of actions that you
knew, or should have known, are illegal? That's part of the insurance
companies position here, they refuse to indemnify a policy holder for
consequences of illegal activity.


How is it illegal? It would certainly not be "illegal" if the insurance
responsibility legally defaults to that of the company by power of the hold
harmless agreement and being named additional insured on the company's
insurance policy.

JimH wrote:
wrote in message
ups.com...

JimH wrote:
"Fog Dog" wrote in message
oups.com...
Thanks for the input. It is providing quite a bit of food for thought.
I understand that this is not necessarily a black and white question. I
have had the unfortunate experience of a total vessel loss once before
and know first hand how hard any insurance company will look to avoid
paying a claim, hence the question. Fortuntately for me that time it
was a material failure and was documented by an investigator. Still
this was an unfortunate experience and not one I wish to relive!

So the problem rests with the company reimbursing my fuel expense. What
about the case where I and a few fellow employees go out for the day
and they contribute fuel money? Is that a boat for hire situation?
Another case is someone we do business with and I go out for an
afternoon for lunch... I expense the lunch and the fuel cost. This is
not intended as a charter... I still set the agenda and go where and
when I specify, not the guest. How can this be construed as a charter?
Another question revolves around me, as a manager, taking my team out
for a day... expense the fuel and I am not covered. If I pay for the
fuel... and we discuss business (hard not to) am I now covered or not.



Have your attorney draw up a contract that includes a hold harmless
clause
(in your favor) and have the company owner sign it. I would also ask to
be
named as additional insured on their policy for the days you will be
hosting
company events on your boat.


Can you be "held harmless" from the consequences of actions that you
knew, or should have known, are illegal? That's part of the insurance
companies position here, they refuse to indemnify a policy holder for
consequences of illegal activity.


How is it illegal? It would certainly not be "illegal" if the insurance
responsibility legally defaults to that of the company by power of the hold
harmless agreement and being named additional insured on the company's
insurance policy.

It is illegal to carry passengers for hire without a license.

When your company says, "Have your boat at the annual meeting on June
15. We want you to take individuals X,Y, and Z out for a fishing trip
or a sight seeing tour while they are in town. We'll pay you something
to offset your expenses......." that's a pretty clear case of a vessel
for hire. Simply because the operator isn't collecting enough to clear
a "profit" doesn't change the nature of the operation from a specific
charter to a pleasure cruise.

(When you invite some friends to join you on a fishing trip that you
would have taken anyway, (whether or not any friends joined you), and
with no requirement or expectation that they are going to pay for fuel
it isn't illegal for them to race you to the cashier when you refuel
and pay for a portion of the fuel costs- different scenario).

Nor would I rely on the employer's insurance company. The OP already
has insurance, but wisely checked to see if this operation would be
covered and was told that it would not because it was commercial in
nature. Simply getting a letter naming you as additionally insured on
the company liability policy doesn't do much if the company policy is
written so that there isn't any coverage for acts committed outside the
auspices of the law. All you actually become is "additionally
*un*insured" if a loss results from an activity excluded from the
policy.