Insuring Sailboat with Multiple Owners

[OrangeCrush]

I'm looking at trading up to a 35 or so foot sailboat in the next couple years and some of my friends are interested in investing as 10% owners. For them to have use of the boat at the marina without me it seems that they need to be on the insurance policy. They wouldn't be taking it out by themselves, but being able to hang out off Manhattan at the mooring is part of the draw to invest 10%.

Does anyone know what happens when you put multiple owners on an insurance policy? Do the rates go up? Is there a limit to the number of owners you can put on it? Do they need to be legal owners on the title too in order to add their names to the insurance?

Also, any very rough estimate as to how much I should expect to pay annually on a $50k 35' boat from the early 80s, Say a Cape Dory 36 or Southern Cross 35?

And what are the best companies to call for quotes?

Sorry so many questions... I never had insurance on my Pearson 26 but it's definitely going to be necessary with the new boat.

[wristwister]

For starters, what sort of insurance are you talking about? Just liability insurance? Or are you wanting comprehensive to insure your boat up to a certain value?

In my case, three of us co-owners are on the title, but the insurance is in just my name. my insurance allows others to captain my boat, provided they are authorized by me, so we're covered. But ... that's just for liability coverage. I pay ~$260/year in the Seattle area.

[OrangeCrush]

Well I would at least get liability but probably more than that. I'm still a long way off from making those choices or even know what kind of boat I'll be insuring.

I just wasn't planning on putting the friendly investors legal on the title or insurance since they won't be sailing it without me and I'll be the overwhelming majority share. But since the place I want to keep the boat seems to require it for access, I may have to go that route.




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[Stumble]

I am a little confused. Is there a requirement that they be co-owners in order to have access to the boat in the marina, or does the marina just require they be on the insurance?

Generally there is no requirement that you be a co-owner to be listed as an authorized operator on the insurance. However the insurance company may have some limitations on who they will insure to use the boat. And you may run into a conflict between these. The marina may want them listed, and the insurance company may not be willing to insure them due to a lack of experience.

[valhalla360]

Your best bet is to go talk to an insurance agent and be honest about what you are doing.

The problem I see is you are running a fine line between a buddy taking the boat out for the day vs running a commercial operation. If you aren't putting them on the title or insurance but you are taking money from them for the express purpose to provide access to the boat, that sounds a lot like a charter operation.

Taken at face value, my guess is the marina sees it as a commercial operation (bank and insurance company may feel the same way) and the burden is on you to show that it's just a few buddies who went in to buy a boat together.

Beyond that, the insurance company may increase the rates based on
- The least experienced co-owner.
- The likelyhood that with multiple owners, the boat will be exposed to risk far more often because it's out on the water far more often.

[S/V Illusion]

You could rely on the uninformed opinion of people you don't know or... You could ask your underwriter. Your choice.

[OrangeCrush]

Thanks this is helpful, and yeah I know my question was a little vague and/or confusing so sorry about that. Maybe I can explain it better...

It's definitely a buddy situation and not a business that I'm talking about. Some of my close friends, the guys who usually come on extended summer trips with me, are planning on chipping in a percentage of the purchase price of my next boat since otherwise the boat I want will be a little out of my financial reach. Technically they will own a share and get back their percentage if I sell the boat, although I had planned on keeping it simple and putting the title in my name only. They won't be sailing the boat without me at all, but since it will be moored at a lovely spot off Manhattan, I thought I could at least give them access to to the boat while at the mooring to cook dinner, spend the night, host friends in a nice setting, etc.

The marina (which is run by the nyc parks department) told me that additional owners have to be registered with the marina (no problem) and listed on the boat insurance to have access to the boat ($$). I was guessing that adding them to the insurance would make it more expensive since they are not experienced skippers and it sounds like this is true.

I would of course talk to the insurance agents and be clear about the situation, but since the entire boat is hypothetical I thought I would start here first.

I'll have to speak to the marina about it more clearly of course and talk to my eventual insurance company. Is it perhaps possible to list them as part owners on the title but not put their names on the insurance? Maybe that would satisfy the marina's requirement.

Let me know if you have any more suggestions and thanks again.

Jack

[valhalla360]

Sorry if I implied you were doing something nefarious. That wasn't the intent. Just looking at it from thier point of view...if it walks like a duck and quacks like a duck, the logical assumption is it is a duck, so you have a burden to convince them otherwise.

Being a govt marina, that makes it a little more difficult. They often have less flexibility to make reasonable exceptions. My guess is they want to make sure the insurance will cover them if there is an accident, in particular a docking accident in the marina. Again this is a situation where you are deviating from the norm. The marina management doesn't want to police your co-owners, so if you aren't there to police them, they want assurances that the marina won't be on the hook if there is an incident.

There could also be an ulterior motive. In order to maintain security, they may prefer to limit those who have unaccompanied access to the docks. They can't prohibit the owner from visiting his boat but if someone abuses it and gives the access code to everyone and thier brother, it's hard to maintain that access. Once you get on the docks, it's incredibly easy to break into most boats, so discouraging random people walking the docks is a first step in security.

Again based on your explaination, none of this applies but it looks at first glance like it applies.

[Cheechako]

I know I can insure my car with myself as primary and others listed on the insurance also. You may find your car insurance company is the least expensive boat insurance too for local use. Try them.

[skipmac]

Originally Posted by OrangeCrush

It's definitely a buddy situation and not a business that I'm talking about.

Hi Jack,

I think it's clear to the forum that this is just a cost sharing thing between you and friends but you do need to be careful how you structure the arrangement.

It doesn't matter to the USCG and insurance companies if you are dealing with friends or strangers, if the agreement is not managed properly it could be perceived as a business or charter and cause all sorts of havoc even to requiring you have a captain's license when you take people out on the boat.


By the way, nice boat. I like Pearsons.

[OrangeCrush]

Originally Posted by skipmac

Hi Jack,

I think it's clear to the forum that this is just a cost sharing thing between you and friends but you do need to be careful how you structure the arrangement.

It doesn't matter to the USCG and insurance companies if you are dealing with friends or strangers, if the agreement is not managed properly it could be perceived as a business or charter and cause all sorts of havoc even to requiring you have a captain's license when you take people out on the boat.


By the way, nice boat. I like Pearsons.

Thanks! The Pearson 26 has treated us very well but I'm ready for something a bit more substantial so I've listed her for sale. I'm very sad to see her go but excited to sail to new places in a new boat.

I completely agree with what you said about outside perceptions and the Coast Guard... so what might be the best way to structure such a friendly arrangement?

Marina policy aside, it doesn't seem like accepting a one time gift from a few friends months before buying a boat would get me in trouble by itself. I'd be the owner/operator and they are unpaid and unpaying crew. I guess the part that would cause a problem would be having them come and go like owners or put their names on some paperwork without it being completely official.

So what if I made them part owners on the title? Would I be able to insure the boat as the only operator or are they automatically assumed to be sailing the boat? And how many owners can you put on a title anyway, and how is their percent share represented?

Worst case is I'm just not able to give them access to the boat at the mooring, and the other worst case is that insurance is a bit more expensive with more sailors on the policy.

But if there is a way to do it properly, either officially or unofficially, I'm all for it.

[valhalla360]

Originally Posted by OrangeCrush

I completely agree with what you said about outside perceptions and the Coast Guard... so what might be the best way to structure such a friendly arrangement?

Marina policy aside, it doesn't seem like accepting a one time gift from a few friends months before buying a boat would get me in trouble by itself. I'd be the owner/operator and they are unpaid and unpaying crew. I guess the part that would cause a problem would be having them come and go like owners or put their names on some paperwork without it being completely official.

So what if I made them part owners on the title? Would I be able to insure the boat as the only operator or are they automatically assumed to be sailing the boat? And how many owners can you put on a title anyway, and how is their percent share represented?

Worst case is I'm just not able to give them access to the boat at the mooring, and the other worst case is that insurance is a bit more expensive with more sailors on the policy.

But if there is a way to do it properly, either officially or unofficially, I'm all for it.

Be careful you are getting close to breaking the rules. If you take money from them, either they are owners or they are customers. "Gifts" put you in a gray area when there is a clear expectation that they will have access to the boat in return for that "gift"

As long as all the buddies stay buddies, you can probably get away with taking a "gift a few months before". The problem is when there is a falling out or an accident on the boat...suddenly you get thrown under the bus.

Ideally put them on the title and insurance even if it costs a little more. At the very least put everything in writing with a signed contract. It seems overkill but it clarifies what the rights, rules and expectations are. Just doing this will often head off issues but while no one thinks things will turn sour with thier buddies, it happens more often than you would think.

[OrangeCrush]

Well said and point well taken.

How does a title with multiple owners work, with percentages? Or is that drawn up in a separate contract?


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[JerseyJoe]

Do you already have the mooring at the marina secured? Because you might find there is quite a waiting list so your questions are all mute in that case in the near term.
Do your friends currently carry this arrangement (minus the cash) with you at the same marina on the Pearson 26? What is sounds like is you are in essence intending to provide a boatel to your friends which indeed who require insurance as such for all involved for safety sake. Especially if they are bringing their friends for overnights or dinners or such without your supervision.
Best as all have suggested prior here. Bear the brunt of doing the deal properly. All names on title as co-owners and all names on insurance with intended use outlined. Since your question is hypothetical, remember that the range of accidents are hypothetical as well, but quite possible. Pay up front for sound mind and sound arrangement. My two bits.

[Hydroghyl]

I think the suggestion that you talk to your agent is a good one. I don't see why boat insurance is that much different than car insurance and you are allowed to let someone else drive your car. It is still insured


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