Insurance solutions needed

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mrdeepseafisher

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I am headed to Florida today to prepare for survey and seatrial on Monday and Tuesday so I began trying to arrange insurance for the boat a couple of weeks ago. I called my agent that handles both my business and personal insurance and I am questioning the answers I am getting back.

I would like to set up an LLC to own the boat in order to protect it from other business interests. Plan is to use the boat for my family and only occasionally allow friends and sometimes clients on the boat. I don't intend to have my primary business pay for the boat or be involved in any way with the boat. The clients that I plan on allowing to fish with me are actually people who I have become personal friends with over the course of working together for several years.

So my insurance agent has come back to me and said that the boat is not insurable thru a business name. I can only insure it as an individual owner.I don't understand why and I am not sure they have enough experience with this type of insurance to know.

Anyone have any experience with this? Boat is 1979 53ft Hatteras YF.
 
First of all, congratulations. This must be an exciting time for you.

As for your question; I don't think this has anything to do with the type/brand/age of the vessel. Since you're not using it for business (charter), it's not a business. You wouldn't set up a corp or LLC to own your house or car, so why would you for a boat? You would not have any business liability from a personal asset unless your business interests are sole proprietorships. If your business interests are LLC or corporations (S or Corp, for example), they are entities unto themselves as far as taxes and liabilities are concerned and thus isolated from your personal assets.

This is my understanding of how things work. Check with your CPA/accountant.
 
Mixman is correct. In setting up the boat under a LLC, the corporate veil can be pierced to you unless the boat is used for hire, which means a licensed Captain and CG inspected and documented vessel. Simply setting it up as the LLC's only asset with the sole purpose of holding the boat is not going to protect you from liability.

Your insurance underwriters are correctly assesing the situation and guiding you so you don't run afoul of the "use for hire" laws which could be problematic for you and your insurance underwriters.

We deal with the same issues in aviation all the time.
 
CPA is the one working on the issue. He came to me after I gave him our agent's name for point of contact. This CPA has several clients who has their planes set in in an LLC. We were planning on doing same with this boat.

We can't seem to get a clear understanding form insurance agent why we can't get insurance. Our agent came back with only one carrier and that was using my personal information. I have had several other boats (and currently have 2) insured with other carriers. One is Progressive and I have had Boats U.S.

I don't quite understand why we are having an issue. Don't know if it is my agent or a change in insurance moving form smaller boats to larger.
 
I don't see the advantage of incorporating the ownership of a boat (or plane, or vehicle, or any property) that isn't going to be used for commercial purposes. It seems to me it would create a big red flag for the IRS to take a look at. What is it I'm missing?
 
I've written boats in the corporate name many times when the corporation is the owner on a private pleasure craft. you may need to seek out a marine specialist.
 
Can you get individual owners coverage on that boat without all the other issues?
 
Those planes likely are operated under Part 135 or Part 121 (in other words have Air Carrier Operating Certificates) and/or have lease backs.

CPA is the wrong guy to deal with this. Your lawyer should be the one advising you on this issue.
 
LLCs are intended to limit personal liability that arise from the business or asset of the LLC. The maximum exposure is the assets of the LLC. If there is personal liability from another business, for example, a partnership or a sole proprietorship, the creditor can reach any asset, which includes the LLC. Simply put, if you "own" something, that something can be reached, whether it is your car, corporate stock or an LLC. So to do what you want, you can't own the LLC.

As to insuring a boat in an LLC, I have had three clients with corporations whose sole asset was a boat. None had problems securing insurance. The companies were concerned about the principal operaters qualifications and experience. Suggest you look elsewhere than your own broker.

Gene
 
Many insurance companies who predominately or solely insure "pleasure watercraft" have named unacceptable risks in the filed rules meant to deny policies "written in the name of a corporation."
Why? Well, because the company's target market and the market they are priced for is for pleasure. The first step to that is to make unacceptable all situations of commercial (e.g. Use).

It's not personal, it's just insurance.
 
You better call "FLO" ! I'll bet she can handle it!

A lot of 'associated' business' have a boat they take prospective clients out on Sport Fishing trips.
That must be available to you.
 
New Hampshire, One Beacon, ACE, can all do corporate owned boats if the purpose of the corporition is for owning the boat. it's not a big deal to do.
 
I can get you the number of a great broker who specializes in Hatteras boats and can walk you through the details or get you answers. Size and age of the boat come in to play in your case as well.
 
Not agreeing with a lot of the answers on here.
Yes you can get your boat insured and the use of an Delawere LLc is very common.
The boat will be owned by the LLC with you showing up on the insurance as the approved operator.
The LLC will hold up as long as you are not the only officer on the books, do a google search and you will find companies that specialise in setting one up and maintaining it for you.
It IS a way to limit ones liability and I know of plenty of boaters that have there boats "owned" that way. Some even go as far as filling a lean for the total value of the boat so the net is an empty LLC.

This is no different than what corporations do by have small separate entities so that if one fails it does not bring down the whole house.
 
CaptN, I guess you could do that, that would be just like the doctors here in Florida. When you walk in to most doctors offices down here you will see a notice on the wall somewhere stating the doctor has elected not to carry malpractice insurance and if you where to check into his financials you will find he does not own a thing, everything is in his wife; mother; you name it but he does not have a dime! And with that you will not find a single attorney willing to take on a case against the Dr.

no case = no liability
 
If the corp is the owner and you are the operator, are you required to have a Captains license? If so, are there costs and liabilities associated with that license? Just a thought.
 
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