Number 3 -- 1997

Recreatonal Boater Liability
For Oil Spill Coverage

Preface

This Speed Gram (3-96) provides useful information on Oil Spill Liability Coverage for recreational vessels and serves to complement information on Environmentally Friendly Boating presented in Speed Gram (2-96). Please share this information with students in our boating safety courses.

Two points should be noted:

1. The discussion provided below focuses upon the potential liability to recreational boaters arising from oil spills and a practical suggestion to limit the resulting costs by purchasing insurance coverage. As written, it is clear and technically accurate. Nonetheless, it may come across as "hard line" if not carefully presented. Point out that this legislation was designed to help achieve a cleaner environment and to ensure that, in the event of a spill, the responsible parties would be made to pay, not all of us in the form of higher taxes. By sharing information with your students, you are providing a useful service rather than attempting to be heavy handed.
2. In mentioning the availability of insurance coverage, please be sensitive to the need to avoid any endorsement of any individual company's product or service. Instead, suggest to your students that they "read the fine print" in their policy to learn what oil spill liability coverage is included in their policy.

We all know that recreational boating can be a relaxing and pleasurable activity, as well as an expensive one. But, what you may not have realized is just how expensive it can become, from a perspective which you may never have before considered. Of the many costs associated with the responsible operation of a vessel on U.S. waters, oil pollution insurance might very well be an appropriate investment. Even knowledgeable boaters may be unaware of their potential financial liability under provisions of the Oil Pollution Act of 1990 (OPA90), the watershed environmental legislation passed in the wake of the massive Exxon Valdez oil spill in Prince William Sound, Alaska.

While OPA90 does not require owners or operators of pleasure craft displacing 300 gross tons or less to demonstrate financial responsibility (a system which requires you to prove potential financial coverage, much like an automobile insurance policy) it does hold them responsible for the costs related to an oil pollution incident which they have caused or contributed. In accordance with the law, the financial liability for all non-tanker vessels is $600 per gross ton, or $500,000, whichever is greater. These monies may be required of a recreational boat owner or operator as well, for the cost of the Coast Guard, or other federal, actions taken to remove oil, prevent an imminent spill, or to pay for damages resulting from an oil spill for which they are deemed responsible. These claims, which are a unique component of this legislation, may include damage to property, loss of profits, loss of subsistence, loss of government revenues and increased cost of public services.

What does this mean to you? Well, if you are an owner or operator of a pleasure craft that runs aground, sinks or spills oil in some manner, you could potentially be liable for up to $500,000 to reimburse the government for the cost of the cleanup, monitoring, assessing damage to natural resources and compensating claimants damaged by your spill. This liability may exist regardless of how the accident was caused. The ultimate disposition might have to be resolved in the courts. In addition, you might also have to reimburse the government for costs incurred to prevent your vessel from polluting, even if not one drop of oil was spilled! This is a central tenet of the Oil Pollution Act: "The Polluter Pays" for all costs and damages of an oil spill or the substantial threat of a spill.

The goal of financial responsibility that this principle promotes has proven to benefit the marine environment. So far, the implementation of OPA90 has significantly reduced the number of oil spills occurring in U.S. waters. Diligent cost recovery from responsible parties has saved $Millions in federal, state and local government expenditures as well. What can you do to avoid this potentially high financial risk? These costs can be assumed or defrayed through the purchase of liability insurance for your personal vessel. While this insurance may be viewed as an additional expense, it should also be considered a precautionary necessity, according to the National Pollution Funds Center, the Coast Guard organization in Arlington, Virginia that is charged with managing the liability and compensation provisions of OPA90. Very few recreational boaters now retain insurance policies that provide for liability coverage to meet the requirements of OPA90. Even those who do may find that their current insurance policy's oil pollution clause is vague regarding the scope of coverage. As a result, many boaters may be left in a financial bind. Could you afford to lose your vessel in addition to incurring debt of up to half a million dollars? If not, you may wish to consider securing pollution insurance for your boat that will meet this potential risk.

Some companies now issue policies for this purpose. You should check your policy for coverage. For more specific information on oil spill liability or compensation questions, you can contact the National Pollution Funds Center at (703) 235-4700.

John Baker and LTJG Kevin Ivey, USCG