Lending Your Houseboat

Know the risks before you loan

September 2010 Feature Joan Wenner, J.D.

Houseboats are a wonderful way to enjoy being out on the water no matter what the size or amenities, which is why they are a favorite choice for people to ask to borrow. Allowing someone else at the helm in the owner's absence is not a decision to be made lightly as there may be costly consequences.

We focus here on the boat owner's possible legal responsibility in lending the craft, rather than any act or failure to act on the part of the borrower that causes or contributes to an accident or mishap. Negligence is a legal concept most people recognize and generally it is conduct falling below the standards of behavior for the protection of others against unreasonable risks of harm, and does in fact cause harm and/or property damage. Courts inquire what would be expected of "a reasonably prudent person acting under similar circumstances."

In most states individuals may be on the hook for damages caused by other persons who are operating their houseboat with their direct or implied permission. The owner can be named in litigation by way of the legal theory of "vicarious liability." This basically means one person can be liable for the negligent actions of another person even though the first person was not directly responsible for what happened.

Negligent Entrustment

A boat's owner could be courting trouble loaning it to another he knows-or should know-says the law, is likely to use it in a dangerous or potentially unsafe manner. Under the well-established common law theory of negligent entrustment, liability can attach to the owner where injury or damage results from the negligent, or reckless, acts of the craft's borrower. Some examples are allowing underage persons to operate the craft, knowledge of someone's inexperience in operating in bad weather or low visibility conditions, inexperience with fueling practices, or there is unfamiliarity by the borrower with the type of craft and/or its equipment. Is the borrower versed in the navigation rules and other rules of the road? Familiar with the instrumentation array? Is there an awareness of accident reporting requirements, what to do to keep the craft from further damage if there's a mishap?

For those houseboaters carrying personal watercraft (PWC) aboard, be sure those allowed to drive them possess the skill to do so safely. One state study showed almost half of the reported PWC accidents involved drivers with less than 10 hours of experience illustrating the importance of 1) checking a person's knowledge and ability to properly operate the craft before allowing its use, 2) knowledge of waterway laws and safety equipment and 3) cautioning the user that the owner can land in some very hot water if that boat is not driven responsibly.

Real Experiences

A real case in point was a teen family member of the boat owner in turn lent it to a friend for a spin without checking first with the father. A short time later the father was notified by the marine patrol the young man had been involved in an accident and cited for driving in a reckless manner and operating in an area restricted to swimmers. While the teen who lent it to his friend was himself okayed to drive the PWC, in a later lawsuit the father also was dragged in as the boat's owner. The teen lender was deemed to have been negligent in lending it to someone he knew rode his own personal watercraft recklessly on more than one occasion. Fortunately this houseboat owner possessed adequate insurance that stepped in to defend their insured in the litigation.

In another case the operator of a loaned boat was involved in an accident and charged by the authorities with operating the vessel in a negligent and careless manner, plus operating under the influence of alcohol. The owner was subsequently on the hook for damages as there was ample evidence that he knew the driver had already been drinking when he stepped aboard earlier in the day!

What boaters must remember is there is a legally imposed duty of care placed on a boat owner for acts of an individual under some circumstances who is placed in charge of the boat's operation. Some states also have specific statutes applying to an owner's authorizing or knowingly permitting anyone "who by reason of physical or mental disability is incapable of operating such vessel under the prevailing circumstances." Others simply typically refer to "unqualified" individuals.

In another boat loaned/negligence claim, and a case where the boat owner was also named in the lawsuit, an elderly guest invited aboard by the operator grabbed a starboard handrail as instructed by the operator but fell attempting to board the vessel and suffered a severe eye injury. The craft had been partially beached on shore at the time of the accident. Here the court ruled there was no negligence on the part of the operator for not assisting the aged guest or in not providing an alternate and perhaps safer means of boarding. For our purposes it goes to show, however, that owners are often brought into these legal actions as a matter of course, as well as how quickly mishaps can occur whether the owner or someone else is in control.

Marine Insurance

Negligence or degree of culpability issues aside, consider how loaning the vessel may affect coverage under the owner's marine insurance policy. As a longtime boater myself, I strongly urge that policyholders read and understand the coverages and stated exclusions contained in their policy document.  Terms and definitions not completely understood should be discussed with an insurer representative. Take nothing for granted.

With that said, an insurance expert with BoatU.S. offers important information relating to `permissive use' for boaters who occasionally loan their crafts, or may be considering doing so. According to Jim Nolan, Director of Underwriting, one big issue is whether a third party operator is in fact covered under the marine policy, "While most policies extend coverage to the named insured, family and other permissive operators, not all carriers have the same provisions and some only cover use by the `Named Insured.'"

Even if permissive users are covered, if there's an accident, no matter of fault, the owner, advises Nolan, can get pulled into a costly and time-consuming legal situation when all he did was hand over the keys and say, "Have a good time." 

Perhaps the most important lessons to be learned are exercising caution if agreeing to lend your houseboat or other recreational vehicles, be confident in your borrower's capabilities and knowledge in operating the craft. And if you do loan it out make sure you are properly insured. Remember, this could be a good case for pay now or potentially pay more later. It should also be remembered that a policyholder's claims record can have an impact at renewal time and/or future premium rates.

Naturally there can be a variety of scenarios and the facts of a particular case will factor into the possible culpability of a vessel owner. One thing is for sure though, in the area of `permissive use' knowledge can go a long way toward peace of mind should someone else temporarily want to be captain.

The author is a longtime boater with a law degree and welcomes questions or comments at joan_writer@yahoo.com.

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