Imagine a situation where you are hurt in a boating accident. After spending time in the hospital, you receive a letter enclosing a “Petition for Exoneration or Limitation of Liability” from a lawyer representing the owner of the boat that caused the accident. The letter states that you are required to file a claim in Federal Admiralty Court within a certain time or your claim will be abandoned. This happens to many injured boaters each year.
Signed into law in before the Civil War, the Limitation of Liability Act allows boat owners responsible for injuries to, if certain things are proved, limit their liability to the post loss value of the vessel. This Act was created to promote United States shipping for a developing nation and before boat owners could easily obtain insurance. Unfortunately, since the Limitation of Liability Act is worded to apply to “vessels” and “vessel” having been defined to include “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”, courts interpret the Act to apply to recreational boats, houseboats and even jet skies. This is an obvious unintended consequence of the Act which was meant to apply to commercial shipping.