Waterways, Maritime Pleasure Craft Boat Ownership, Registration, Insurance & Law

A pleasure craft or pleasure boat is typically a motorized vessel used for personal, family and other recreational activities. They are most commonly used in rivers, lakes and other waterways and stored at a local dock or marina. Pleasure crafts are small to moderate sized boats, typically no larger than 75 feet. They may contain equipment to accommodate people for extended periods of time, such as a yacht.

Laws Governing the Operation of Pleasure Crafts

The United States Coast Guard regulates maritime safety, security and environmental stewardship on a federal level. It is one of the five U.S. armed forces and also an organization that is a part of the U.S. Department of Homeland Security. Each state also has it's own set of laws that govern pleasure crafts and recreational boating. The National Association of State Boating Law Administrators (NSABLA) is a nonprofit organization that aids in the creation of public policy for recreational boating safety.

Registration and Licensing of Pleasure Boats

Vessel documentation or "U.S. Coast Guard Documentation" is a national form of boat registration. By having documentation, it makes it easier for boat owners and operators to provide proof of nationality with regard to issues concerning nationality (whether you are a U.S. citizen or foreign.) This proof of nationality facilitates ease of commerce between the states and aids in more easily admitting vessels to certain restricted areas such as trade on the coasts and fisheries. A boat must be wholly owned by a U.S. citizen and weigh no less than five tons in order to qualify for such documentation.

Boat Financing and Insurance

Since the early 20th century, the ability to get boat financing has been enhanced through the availability of preferred mortgages on documented boats. Lenders will be able to use the documentation to provide a "Preferred Ship" mortgage for the vessel. This mortgage creates a lien on the boat which gives the lender a certain level of priority in the event of a default on the loan. A majority of lenders require this type of mortgage on pleasure boats and will not mortgage pleasure boats without adequate documentation. The requirement can be waived if the vessel will only be operated for pleasure and not commercial purposes.

Another advantage of having documentation on your vessel means that if it is based in certain states like California and Florida, it may transit between a U.S. port and a foreign country port without prior clearance with the United States Customs Service. Its arrival back into the U.S. must still be reported to Customs under applicable regulations. What type of insurance do I need for my pleasure boat? Typically, pleasure boats will need to be insured under an "all risk" policy. It combines hull coverage and protection as well as indemnity coverage against all risks that are connected with the use of a pleasure boat. Contract marine insurance is enforceable under admiralty law, which requires that all applicants for marine insurance must deal in good faith with the insurance carrier. This means that the applicant must disclose every fact regarding the safety of the vessel and any information that is relevant to the risk of the insurance carrier. If there is knowledge of specific defects that the vessel may have, this must be disclosed to the insurance carrier. Failure to disclose material information, whether as an oversight, mistake or inadvertence may void the coverage.

Does marine insurance limit how the vessel can be used?

Yes, marine insurance all-risk pleasure boating policies usually contain warnings that the vessel can only be used for pleasure only and not for commercial purposes. The insurance policy can be revoked if the vessel is chartered, hired for transit of passengers or for any other commercial purpose. Without the expressed written endorsement in the policy for commercial use, the policy and coverage may be voided. If you have your pleasure boat insured with the same insurance carrier that insures you home or cars, review you policy carefully. Most homeowner's policies require specific endorsements for certain activities regarding vessels or vessel operations. The same laws and rules that govern commercial operators govern also pleasure boat operators. Boat operators must abide by the appropriate laws and rules while on navigable waters of the State and the United States to avoid collisions. State laws govern reckless and careless pleasure boat operation. This includes the operation of personal water craft vessels like "jet skis" and "sea-doos" which are common. "No-wake zones" must be obeyed and any interference with navigation is prohibited.

What laws govern registering, numbering and documentation of pleasure boats?

Most states do have prescribed licensing laws. Boat numbering rules fall under state laws. Registration is often viewed as a tax that must be paid to the state, which is based on the length of the vessel. Certain Federal regulations govern boat numbering and have been adopted by the states. A state issued registration number must be displayed on the forward half of the vessel. States are allowed to issue their own state use tax guidelines that deal with vessels purchased within the state. These guidelines will usually dictate when a vessel bought in that certain state must be taken out of that state if sales tax to be paid to the state is to be avoided.

Chartering a Pleasure Craft or Boat

If you own a boat and want to charter (lease or rent it) the vessel to others, you should probably discuss the matter with an experienced maritime attorney who has knowledge these types of charters. The laws are complicated, can vary from state to state and include special customs and regulations as well as specific income tax reporting requirements. Operating a commercial vessel will subject you to additional liability and insurance concerns which extend beyond the operation of recreational pleasure crafts. The U.S. Coast Guard provides the OUPV Credential (Operator of Uninspected Passenger Vessels) which may be required, as well as a captain's license, for commercial operation of a boat. Do all pleasure boats need to be licensed?
Legal Topics
Admiralty & Maritime Law
About author
Michael Wechsler
Michael M. Wechsler is an experienced attorney, founder of TheLaw.com, A. Research Scholar at Columbia Business School and of-counsel to Kaplan, Williams & Graffeo, LLC. He was also an SVP and chief Internet strategist at Zedge.net and legal consultant at Kroll Ontrack, a leading service e-discovery and computer forensics service provider.


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