Watercraft Exclusion on the CGL Form

Q

We have a coverage question concerning exclusion g. on the CGL form. The situation is that our insured is a school and will take groups of schoolchildren to go whale watching, using excursion boats not owned by the insured. The school has requested that we add non-owned watercraft coverage on the liability policy so that they are protected during the sea outings should any child be injured during the boat trip.

There has been a discussion in our office about whether any endorsements are needed in this situation. Exclusion g. deals with watercraft, but is it an absolute exclusion? And, if not an absolute exclusion for watercraft, how could the school be held liable for a shipboard accident since the excursion boats are not owned or operated by the insured?

Pennsylvania Subscriber

A

Based on the scenario you presented in your letter, there is no need for any type of endorsement to provide coverage. The exclusion is only for watercraft “owned or operated by or rented or loaned to any insured”. In the case of going on a whale sighting boat, the school does not own or operate, or get loaned a watercraft. Some may argue that the insured school rents the boat, but that is stretching the “rent” idea. This is an excursion boat owned by others and open to the public for a fee; it is just a ride that one pays for, like an amusement ride. The exclusion is not an absolute exclusion; there are exceptions, and your situation is an exception. The watercraft exclusion is not applicable for your insured's whale sighting trips.

As for when the school would be negligent, a lack of proper supervision is a basis for liability. Another one is possible negligence in picking a non-seaworthy craft or a company that has had a history of numerous accidents. However, based on the information in your letter, any liability for shipboard injuries would probably fall mainly on the whale boat owners/operators; the school would, of course, be brought into the case and the CGL form would provide defense coverage and, if necessary, payment for the negligence of the insured.

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