I have a nice center console, and I started taking people out fishing for $500 cash to cover fuel and bait. It wasn’t a “business,” just a side hustle. Last Saturday, a guest slipped on a bloody deck and broke his ankle. He sued me. My insurance company saw his Venmo payment in discovery and sent me a denial letter for “Commercial Use.”
Key Takeaways
- “Passenger for Hire”: If money changes hands (even just “gas money” from a stranger), you are a commercial vessel. Recreational policies strictly exclude this.
- The “Paper Captain” Scam: Trying to hide the charter by calling it a “bareboat charter” (where you rent the boat and they “hire” you as captain) is transparent to insurers. If you are the owner and the captain, and you get paid, it’s a charter.
- Coast Guard & Insurance: Not only are you uninsured, but if you don’t have a USCG Captain’s License (OUPV/6-Pack), you are committing a federal crime. Insurance will deny based on “Illegal Acts.”
- You Need a Charter Policy: You must switch to a commercial “Charter” policy. It costs about 20-40% more but covers liability for paying passengers.
The “Why” (The Trap)
The trap is “Consideration.”
In contract law, “consideration” means payment. Once consideration occurs, the “Private Pleasure” warranty in your policy is breached.
The policy effectively ceases to exist the moment the stranger steps on board with a wallet.
The Investigation (I Quoted Commercial)
I compared the cost of going legit.
Markel (Charter Lakes)
- Product: The industry standard for fishing guides.
- Requirement: You must have a USCG License.
- Cost: Approx $1,200 – $2,000/year for a bay boat.
Geico Marine (Commercial)
- Product: Good for 6-pack charters.
- Coverage: Includes “Shoreside Liability” (if they slip on the dock).
Personal Policy (State Farm)
- Result: “Sharing expenses” (splitting gas with friends) is allowed. Charging a fee is not. The line is blurry, but Venmo transactions with captions like “Fishing Trip” are smoking guns.
Comparison Table
| Activity | Personal Policy | Commercial Charter Policy |
| Friends split gas | Covered | Covered |
| Stranger pays cash | Denied | Covered |
| Bachelorette Party | Denied | Covered |
| Captain License Needed? | No | Yes |
Step-by-Step Action Plan
- Stop Immediately: If you are running illegal charters, you are one accident away from bankruptcy. Stop today.
- Get Your OUPV (6-Pack): You cannot get charter insurance without the license. It takes about 2 weeks of class and sea time.
- Buy the Endorsement: Call a broker like Charter Lakes. Convert your policy. The premium increase is worth the sleep.
- [IMAGE: Declarations page showing ‘Usage: Commercial / 6-Pack Charter’]
- Use Waivers: Even with insurance, have guests sign a liability waiver. It helps your defense lawyer.
FAQ
Can I rent my boat out on Airbnb (docked)?
That is a “Time Share” or “Rental” use. Most boat policies exclude it. You need a specific “Bed and Breakfast” endorsement.
What if I donate a trip to a charity auction?
Technically, this is commercial (someone paid for it). Call your agent and get a “one-time event” waiver.