Since the 18th century, shipowners have had legal protection limiting their liability to claims arising from use of their vessels. This was because trading on the high seas was thought to expose owners to excessive and potentially uninsurable risk and this warranted protective measures. These rules were later formalised into International Conventions on limitation of liability which still have application today.
Limitation also affects you, the cruising yachtsman, since the protection of the Limitation Conventions extends to owners and insurers of recreational as well as commercial vessels. A yacht owner facing a claim brought by, say, another owner after a collision, or by a visitor injured while on board, may in certain circumstances rely on these limitation rules to place a cap on his potential liability.
The application of UK limitation rules depends on whether UK jurisdiction applies to a particular claim. The domicile of the various parties concerned, the flag of the vessel, and the location of the accident all have a bearing on deciding which will be the correct jurisdiction. Many other countries have some form of limitation applying to maritime claims but the rules and amounts of limitation vary.
Under the UK regime, as an owner, you have the protection of the limits unless you are shown to have intended to cause the casualty, or were reckless as to whether it happened. However, there is no limitation protection when claims are brought by paid crew or in relation to an incident when your yacht is laid up. Nor does limitation apply to incidents involving craft not properly described as “vessels”, such as windsurfers, jet skis and the like.
Owners should be aware that recent changes to the limitation rules of the UK and some other countries have raised the level of the protective caps significantly. For incidents occurring after 13th May 2004, limitation levels have increased sixfold in the UK. Australia, Denmark, Finland, Germany, Malta, Norway, Russia, Sierra Leone and Tonga have also markedly increased the limitation levels.
In an ever more litigious world, yacht owners should not ignore the increasing risk of being sued by a third party. Claims can come from anyone who has access to your vessel or with whom you have been in collision. The compensation culture has taken root and is unlikely to go away.
For all of the above reasons, yacht owners need to ensure that they have sufficient Yacht Insurance cover in place for their personal requirements. It is not enough simply to expect every claim either to go away or to be subject to the provisions of the Limitation Rules; there are enough circumstances in which the protection of these rules may be breached, and you face the possibility of personal liability if you are not adequately insured. We at Admiral would like to assure you that we are able to give you the benefit of our specialist knowledge to ensure that your yacht insurance requirements are met.