US Limitation of Liability Act: Meeting the Covered Small Passenger Boat Exception Articles Genevieve Holloway Published: April 16, 2026 Contact author Download article pdf Background   46 United States Code (U.S.C.) § 30501 affords ship owners the right to limit their financial exposure from claims for damages arising from a maritime incident in certain circumstances. Derived from the historic Limitation of Liability Act 1851, this statute provides a structure for ship owners to potentially limit their liability when the damages occurred “without the privity or knowledge of the owner”. In situations where limitation is granted, any damages awarded are capped to the value of the ship and its freight in its condition at the end of the voyage regardless of the true value of the claim against the owner. The exception to this is in the case of death and injury claimants. If the vessel value limitation fund is insufficient to satisfy those claims, then a separate fund is created which is calculated based on $420 multiplied by the vessel’s gross tonnage. Although this does “not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fishing vessels, [or] fish tender vessels . . .”  The application and benefits of this statute are far reaching. It applies to a broad range of claims which a ship owner may face including personal injury, property damage including environmental harm and cargo losses. It also applies to a wide range of marine vessels including commercial cargo ships, passenger ships, tug and barges and private recreational vessels. This provision provides ship owners, and their insurers, a degree of certainty where claims can be significant in the maritime world. Successful limitation actions must be filed within six months of the first written notice of the claim and, this uniquely maritime doctrine, will always be heard in Federal Court irrespective of where the primary claim has been, or will ultimately be, filed. 2022 Amendments D