Marine liability and compensation: Passenger vessel insurance

Transport Canada is always trying to improve our policies and regulations to better protect Canadians. That is why we’ve introduced regulations to help passengers involved in marine accidents get compensation. The Regulations Respecting Compulsory Insurance for Ships Carrying Passengers are part of the Marine Liability Act. As of January 11, 2019, these regulations require operators that carry passengers by water to maintain an insurance coverage of $250,000 per passenger, in case there are claims of personal injury or death after an accident.

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Why introduce regulations?

In 2000, Transport Canada began working to include the International Maritime Organization’s Athens Convention relating to the Carriage of Passengers and their Luggage by Sea into Canada’s legislation. The convention makes vessel owners liable for death or personal injury from a shipwreck, collision, stranding, explosion, fire and any defect of the ship, to a limit of around $314,700,Footnote * per passenger.

That same year, a tour boat sank in 15 m of water in Georgian Bay and an inquest into the accident found that the owner-operator wasn’t insured. Following this tragic accident, the Office of the Chief Coroner of Ontario recommended that commercial ships carrying passengers be required to have insurance. As a result, Transport Canada began working with stakeholders to pass new regulations that would require ships that carry passengers to be insured.

The new Canadian regulations go one step further by making sure operators carrying passengers have the financial resources to compensate affected passengers. The insurance requirements in the regulations also benefit passenger vessel operators by protecting them against catastrophic losses, and possibly civil actions, that could lead to them losing their boat, business, house, and other personal assets.

What’s required under the regulations?

Transport Canada regulations help passengers involved in marine accidents get compensation. These regulations require operators that carry passengers by water to maintain insurance coverage for claims of death or personal injury. Specifically, the owner or operator of a passenger vessel must:

  • maintain at least $250,000 of liability insurance coverage, multiplied by the passenger capacity of the ship, and
  • provide proof of insurance that meets the requirements. Proof of insurance is either:
    • a Certificate of Insurance issued by an insurer or an authorized representative of the insurer, or
    • a Certificate of Entry or Insurance, issued by a Protection and Indemnity (P&I) Club that’s a member of the International Group of Protection and Indemnity Associations

For example, if a vessel can carry up to 3 passengers, it needs to maintain at least $750,000 of insurance as well as proof of insurance. If a vessel can carry up to 10 passengers, it needs to maintain at least $2,500,000 of insurance as well as proof of insurance.

If I carry passengers, how much insurance do I need to carry?

Insurance per passenger

The passenger capacity of a ship is set by the operator, who can decide that they will carry fewer passengers than the maximum number listed on their plate.

To get a copy of the Certificate of Insurance template, please send an e-mail to

Who needs to carry insurance?

Under the new regulations, a vessel must have passenger insurance if they carry passengers on board a commercial or public purpose ship in Canada. This includes voyages that depart from Canada, travel outside of Canadian waters, and return to Canada as their final destination. For example, a cruise vessel that departs from Halifax, makes a stop in Boston, and returns to Halifax.

  • A commercial vessel is a vessel used for commercial purposes
  • A public purpose ship is a ship that transports passengers from one place to another for free. An example of a public purpose ship is the free ferry between Kingston and Wolfe Island

This applies to most commercial and public purpose ships that operate in Canada and includes:

  • ferries
  • sightseeing boats
  • cruise ships
  • water taxies
  • commercial fishing vessels that carry passengers
  • offshore supply vessels or other work boats who are hired by a company to carry workers
  • tug boats that carry marine personnel solely for transportation

The regulations do not apply to:

  • adventure tourism
  • sail trainees
  • international carriages
  • guests travelling on a pleasure craft
  • Department of Fisheries and Oceans Canada personnel travelling for inspections
  • search and rescue work carried out by the Canadian Coast Guard Auxiliary
  • trips operated by the federal, provincial or territorial government that is self-insured or by a company entitled to indemnification by government

Still not sure if this applies to your vessel? Try using our flow chart.

Adventure tourism

Examples of adventure tourism include white water rafting, jet boat companies, sea kayaking, storm watching, and whale watching on zodiac boats. To be considered “adventure tourism”, an activity must:

  • expose passengers to an aquatic environment
  • require stronger safety equipment and procedures than those normally used when carrying passengers
  • expose passengers to bigger risks than during a regular voyage
  • explain the risks of the trip to passengers, and have passengers agree, in writing, to these risks, and
  • any condition added to this list by the Governor in Council

Activities that are considered adventure tourism are excluded from the regulations because liability waivers, that most adventure tourism operators require, are invalid under Part 4 of the Marine Liability Act. Operators asking passengers to sign a waiver of liability, are still liable unless they meet all of the conditions listed above for adventure tourism.

Who are not considered passengers?

  • The master of a ship, a member the crew, or any person who works on board a ship
  • A person on board a ship that’s not used for a commercial or public purpose and who hasn’t paid money to be on board
  • A person on board a ship who the master has agreed to carry after a shipwreck, distress or other reason that the master or the owner could have prevented
  • A stowaway, a trespasser, or anyone who boards a ship without permission from the master or owner

Crews and those who work on board a ship are not considered passengers, but the regulations do apply if a commercial vessel carries:

  • family
  • friends
  • anyone on board, other than crew

For example, if a commercial fishing vessel operator plans on carrying only crew, but then decides to take some friends and family out on a sunset tour, the family and friends would be considered passengers. As a result, the regulations would apply and the operator would need to carry passenger insurance.

A pleasure craft is a vessel that is used for pleasure and does not carry passengers. If a vessel is only used for pleasure and the people on board haven’t paid money for the trip, then they’re considered guests, not passengers.

If someone has a pleasure craft that’s only used for pleasure and to carry family members or friends, they don’t need to follow the regulations. However, if the owner received any payment for carrying people, even friends or family, those people are considered passengers and the regulations apply.

If someone carries people on board their pleasure craft to make money, then those on board are considered passengers and the regulations apply. Examples include:

  • someone who takes money to carry people on board their pleasure craft at a charity event
  • someone who uses their pleasure craft to carry people in exchange for a charitable donation
  • someone who offers a trip on their pleasure craft as a prize to a charity
  • someone who requires people to pay a dock access fee or entry fee before boarding, or
  • a realtor who uses their pleasure craft to show clients properties for sale

How are these regulations enforced?

A Marine Safety Inspector can board a ship and ask for proof of insurance under the Marine Liability Act.

If the operator can’t show that they have proper insurance coverage, they could:

  • have their vessel detained, and
  • be charged a fine of up to $250,000

If you need more information or have any questions, please contact us:

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