Flag etiquette has been transmitted to us by generations of mariners. Although not often appropriately respected these days, especially not by charterers, we might add, observing flag etiquette can provide some pride of perpetuating a very old tradition as well as some fun. We will not get into deep details and purist fanaticism. However, we will try to show charterers the minimum that is expected for basic respect of rules.
Therefore, we will only talk here about 4 main flags, potentially used by charterers and charter boat owners: the Ensign or the National flag; the club burgee; the Private Signal; and the Courtesy Flags.
The Flags
Ensign
Boats should fly the National Flag. Most pleasure boats in US waters have a choice of 2.
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The yacht ensign, with its fouled anchor over a circle of 13 stars, the "Betsy Ross" flag. Originally restricted to documented vessels only, it is now commonly flown on recreational boats of all types and sizes instead of the National Flag (see picture).
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The 50-star flag "Old Glory" you are familiar with.
The appropriate time to fly the ensign is from 0800 to sunset, except when racing. It is also important to take the flag down prior to leaving the yacht if the ship will be unmanned at the time of sunset.
However, whenever a boat is taken into international or foreign waters, the 50-star U.S. ensign is the proper flag to fly and the yacht ensign cannot to be displayed. In other words, if you own a US boat in the British Virgin Islands, you should not fly the Ensign, but the National Flag.
Boats today fly the ensign from the stern, which provides the best visibility, but it can also be flown from the leech of the most aftersail. When flown from the stern, it should be on a staff (pole) that is sufficiently long and angled, and that is offset to one side (traditionally the starboard side), so the flag flies clear of engine exhaust and rigging.
Burgee
It is a small flag displaying the symbol of the skipper's yacht club or other sailing organization. It may be flown day and night.
Most people opt to fly the burgee lower in the rig, hoisted to the end of the lowest starboard spreader on a thin flag halyard. While purists rail this practice, it is an accepted adaptation of another tradition, which is that the starboard rigging is a position of honor (when you visit a foreign port, that's where we fly the host country's flag). Besides being reasonable, flying the burgee in the starboard rigging is such a widespread custom that to try to end it would be close to impossible.
Private Signal
It is a small, custom-designed and custom-made flag that carries symbols standing for the owner, so it can basically be anything. The signal may be flown day or night, but is not displayed when another sailor is in command. (The rule is: the private signal and burgee follow the sailor, not the boat.)
On a multi-masted boat, the private signal is flown at the head of the aftermost mast. On a sloop, the private signal may be flown from the starboard rigging, either below the burgee or alone.
Courtesy Flags
As a matter of courtesy, it is appropriate to fly the flag of a foreign nation on your boat when you enter and operate on its waters. There are only a limited number of positions from which flags may be displayed. Therefore, when a flag of another nation is flown, it usually must displace one of the flags displayed in home waters. However, it is hoisted only after the appropriate authorities have granted clearance. Until clearance is obtained, a boat must fly the yellow"Q" flag. All charter boats should carry the national flags of neighboring islands as well as the yellow flag, in case charterers want to visit those islands.
The courtesy flag is flown at the boat's starboard spreader, whether the United States ensign is at the stern staff, or flown from the leech. If there is more than one mast, the courtesy flag is flown from the starboard spreader of the forward mast.
As a side note, some authorities are not amused at all if you fly their courtesy flag using an old, raggy flag. Some will even fine you for disrespect! It happened to a friend of mine who was chartering in Turkey.
Lastly, it is also a common courtesy to fly the national flag(s) of your guest(s) on board, if they have a different nationality than the ensign is showing.
Flags' Dimensions
Flags come in standardized sizes, but there are guidelines about selecting the proper size for your boat.
The size of a nautical flag is determined by the size of the boat that flies it. Flags are more often too small than too large. So in the rules below, round upward to the nearestlarger standard size.
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The flag at the stern of your boat: U.S. ensign or national flag should be about one inch for each foot of overall length. For example, on a 40ft. boat, the ensign should be 40 in. i.e. about 3.5ft.
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Other flags, such as club burgees, private signals and courtesy flags used on sailboats should be approximately 1/2 inch for each foot of the highest mast above the water. For example, on a 30ft. boat, with 50ft. between the masthead and the water, the burgee should be about 25 in. The shape and proportions of pennants and burgees will be prescribed by the organization which they relate to.
Raising and Lowering Flags
Fly the ensign from morning (8:00 a.m.) to evening (sunset) whether the boat is at rest, under sail, or under power. The exception to this rule is: The ensign is not flown by a boat in a race, which signals to other boats that you are racing.
To prevent wear and tear, the flag may not be flown when out of sight of other vessels or when nobody is aboard. The flag is flown while entering or leaving a port, even at night. For purists: In the morning, the ensign is hoisted rapidly before other flags. In the evening, it is lowered slowly and with ceremony after other flags come down.
Additional sources:
Seaflags
http://www.usps.org/f_stuff/etiquett.html