One of the better e-newsletters that regularly arrives in my in-box is written by Gary Carroll, who runs Fort Lauderdale-based Comprehensive Yacht Assurance. His company specializes in insurance for the yachting industry, and a lot of reputable charter brokers work with him to provide charter liability insurance for their clients. You might remember my quoting Carroll in this article after I attended an eye-opening seminar he gave about charter insurance in June.
Recently, Carroll's newsletters have focused on "water toy indemnification" forms that some yacht owners ask charter clients to sign before allowing use of the yacht's power-driven toys, such as Jet Skis and Wave Runners. It seems like a small thing--you, the charter client, assuming liability for any damage that you might cause while riding a Jet Ski--but according to Carroll, signing such forms can be "potentially financially ruinous for the charterer."
Why? Because, according to Carroll, if you sign such a form, you are doing three things: releasing everyone else from liability regarding use of the toy, assuming 100 percent liability yourself in case anything goes wrong while you're riding the toy, and limiting or outright voiding any other insurance policies that might have otherwise provided coverage in the event of an accident.
In layman's terms, you are, among other things, absolving a yacht owner from financial responsibility even if an accident is caused by his failure to have properly maintained the toy before you used it. You also may be voiding the terms of your existing homeowner's or umbrella insurance policy, or even your charter liability policy, that otherwise would have covered you in the event of an accident. When you agree to assume 100 percent liability yourself, then other insurance companies can argue that they don't have to pay out, no matter what.
As Carroll puts it when speaking to charter brokers, "indemnification forms are only good for the party being held harmless or indemnified--which in this case is not your charter client."
That's definitely worth keeping in mind should a yacht owner request your signature on a hold harmless or indemnification form of any kind before your next charter yacht vacation.