Paying guests, fishing trips, holiday lets: the permitted use in your boat policy

Paying guests on fishing trips, holiday lets of a houseboat, a friend who chips in for fuel: whether that is still the permitted use in your boat policy is decided by the schedule, not by how it feels. Many European hull wordings contain one short sentence that does the work. A German wording, for example, excludes damage that happens while the boat is used in any way other than the uses named in the schedule. Read literally, that is an exclusion, not a condition, and it says nothing about reducing a payment in proportion to fault.

The starting point is usually the definition of the vessel. German hull wordings typically describe a pleasure craft as a hull that mainly serves sport and leisure, not the carriage of goods or passengers, and that is used for those purposes. That covers the ordinary life of a sailing yacht, a motor boat, a fishing boat, a houseboat or a jet ski. Anything beyond that tends to need an entry in the schedule: renting out the boat, renting it out for more than a set number of days per year, powerboat or jet ski racing, and in some wordings sailing races as well.

Liability wordings often define the permitted use in their very first sentence. In German contracts it is common to read that cover applies to the legal liability arising from owning and using a pleasure craft used exclusively for private purposes, sometimes with occasional private rental of up to 30 days a year without professional crew. Paying passengers or a paid skipper are not part of that sentence. Check whether your wording names a number of rental days, whether it requires a written rental agreement and whether more frequent or commercial letting needs a separate endorsement.

Personal accident cover for boat users is frequently tied to private use too. Look for the words that describe when the cover applies: private use of the named boat, private trips, and whether mooring, lying in harbour, slipping, maintenance and repairs are named as well. Some German wordings also exclude accidents to people who look after the boat professionally, such as employed crew or paid boat keepers. If you employ someone to look after the boat, that is worth knowing before the season starts.

A change of use after the contract was agreed is usually dealt with under the rules on increased risk. German hull wordings often say expressly that renting, chartering or otherwise handing the boat to third parties for payment counts as an increase in risk unless it was agreed. Under the German Insurance Contract Act (VVG), the policyholder needs the insurer’s consent before increasing the risk and must report an increase without delay once aware of it. Deliberate breaches can remove the claim, grossly negligent ones can reduce it, and the claim stays where the change did not cause the loss.

Plenty of everyday cases are not spelled out in any wording, and that is the honest part of this subject. Whether shared fuel costs with crew count as payment, whether a client trip on a company boat is still private, or whether acting as a safety boat for a club training session is a different use, is often left open. Open questions turn into disputes after a loss. The practical answer is to ask before the first trip of that kind, keep the reply in writing and have the schedule changed where needed.

The type of boat makes no difference to the sentence, but the occasion does. For a fishing boat it is the guided trip for paying anglers, for a houseboat the holiday let, for a sailing yacht the crew who share costs, for a motor boat the water skiing session for guests of a business. If you only take family and friends out without payment, you are within the ordinary use and need do nothing. If you plan any of the rest, lay your schedule next to the planned season and settle every difference in advance.