How to Get Snorkel & Dive Boat Insurance | Kona Honu Divers
The Marine insurance industry is getting squeezed. Between the pandemic, Russia/Ukraine war and natural disasters there have been lots of incidents out at sea. A ship carrying bespoke, exotic, luxury cars sank leading to over 340 million dollars in losses. Additionally the rising interest rates are putting the squeeze on insurance companies who typically hold bonds as collateral. These bonds lose money in rising interest rate environments.
In comparison to industries like shipping, the snorkel & dive industry combined is very small if not insignificant. This presents a problem as commercial marine boat insurance providers ask themselves what’s in it for us? Are you here because your policy went up exponentially from last year? Did your policy get canceled? Join the club!
“This guide will help you navigate through the process of finding a new dive boat insurance policy.“
About Me
I am Byron Kay owner of Kona Honu Divers, Kona Freedivers, & Kona Snorkel Trips. All 3 companies are the top rated and most reviewed in the state of Hawaii. Kona Honu Divers received the reader’s choice award for the best dive operator in the Pacific by scuba diving magazine readers.
I’ve worked tirelessly to improve and refine my businesses over the years and have run into some insurance troubles myself. Seeing what lies ahead for other operators has spurred me to write this guide to get you pointed in the right direction so you don’t have to go through the pain that I have in procuring a new insurance policy. If you’re a busy and successful operation the odds that an incident occurs will only go up over time. If your policy was recently cancelled don’t worry! I’ve done the hard work for you.
The Breakdown
What Kind of Coverage You Need
The Solution is Finding the Right Providers
In a Rush? Here’s what You will Need to Apply
What to Do if Your insurance was Cancelled
What is a Claim and how does it differ from an Incident?
How Do I decrease the odds of an incident?
How Snorkel & Dive Insurance Works
Ever wonder what all of these insurancy terms mean and why you need to know them? Here I dumb down the intricacies of commercial marine liability insurance so you can better understand what it is and how to get what you need for your snorkel or dive company.
It all Begins with the Underwriters
Underwriters are the people that host or support your insurance policy with their money. They are behind the scenes and will be the ones creating your policy. If something goes wrong it’s their money on the line to cover the mishap. This is assuming you’re not at fault.
If you want to know who your underwriter is just pull up a copy of your existing policy and they will be listed there. Sometimes one underwriter won’t want to take the entire share of your policy so they will team up with another. The first underwriter will take the majority of the policy (over 50%) and the second will take the lesser portion. This helps to spread their risk in the case of a claim.
Underwriters that are writing policies for dive & snorkel tours:
- Aspen
- Ascot
- Chubb
- Conceptual Risks
- OWL
- DAN
- Intact
- Markel
- Great American
- Gowerie Group
- XL
Most of these entities are a kind of middleman that are taking the risk of covering you and packaging it up into a giant risk/money bundle. They then sell that risk bundle to syndicates which are groups of wealthy people or companies that get together to buy those risk bundles in the hopes that what they are on the hook for when the policies expire is less than the money they put down to purchase the risk bundle. This is how they make a profit.
The Brokers
The next Player in the Snorkel and Dive insurance business is the broker. A broker is the entity who sells the policies created by the underwriters for a commission. There are many many brokers in the United States. Some are big companies like Gallagher and others are smaller mom and pop operations like a local office nearby in your state. There are even international brokers that specialize in dive and snorkel but many don’t have the ability to sell in the United States.
Much like a retail shop carries different brands of products these brokers only have access to a limited number of ‘brands’ to sell to you. This means they only work with select underwriters. No broker works with all underwriters but some have access to more ‘markets’ (underwriters) than others.
The brokers job is to sell you the amount of coverage you need to meet your operational objectives. Do you dive or snorkel at night? Some underwriters won’t cover that. Do you want more than $1 million in coverage? Some brokers can’t do that for you. After having my policy cancelled I contacted 51 different brokers only to discover that many either provided coverage from the same underwriter (the one who cancelled me) or don’t cover scuba, or basically could not meet my operations needs.
Once you have the policy ‘written’ it is the brokers job to make changes to the policy and act as the intermediary between you and the underwriter. This is important.
Types of Coverage
General Liability
This is the insurance most businesses need to cover day to day operations. If you have a physical space like a shop or a storage place or even an office you will need a general liability policy to cover little things like harassment, injuries, fires etc.
Group In-Water Liability
This is the kind of coverage many dive centers need for taking people into the water but not necessarily from a boat. Check with your lawyer/broker but if you have more than one corporation you may need a separate group liability policy for each corporate entity. This is typically needed for scuba operations where a certified professional (divemaster or instructor) is taking people into the ocean. This applies to freediving as well or any activity where the participant needs to be certified to participate.
In this type of policy it is common for the operator (you) to have to add each employee as an ‘additional insured’. This is to demonstrate to the underwriter that the staff involved in an incident is certified to do what they do.
Snorkel operations will need in-water coverage but not of the same caliber where each individual needs to be named. This is because snorkel coverage typically doesn’t require any sort of certification of the crew.
Hull, P&I
This is the coverage that handles everything boat related on the surface of the water. So for snorkel boats and dive boats it covers an incident that occurs on the boat deck. This line can be blurred if, for example, the charter guest is standing on the boat ladder at the time of the incident.
Hull
Hull insurance covers the hardware of the vessel so if the boat sinks or collides with another vessel it covers the cost of fixing the damages or replacing the boat.
P&I
P&I stands for protection & indemnity. This is the part that covers operation of the vessel including guests or crew injuries or having a medical emergency on the boat. In the case of someone having an incident in the water it would cover the aftermath of bringing the person onboard to care for them after the fact.
What Kind of Dive or Snorkel Boat insurance Coverage You Need
This is tricky. It’s similar to auto insurance and it’s bordering on questions like “How many accidents do you plan to have next year?” or “Do you plan to be involved in automotive manslaughter in the coming 12 month period with an uninsured motorist?”. Nobody wants to have incidents on their dive or snorkel charter. The fact is, the more charters you run, the higher likelihood you will have an incident. It’s simply a numbers game. You can put screening questions in place to limit your liability as well as operational safety measures, but in the end people will be untruthful and something will slip through the cracks.
So assuming there will be an incident in your future, what is the likelihood it will turn into a claim? In my experience the likelihood is low but it’s simply a numbers game. The frequency and severity of incidents determines the likelihood of a claim. You can reduce the number of incidents that are likely to occur as well as reduce their severity. See below for advice on how to make this happen.
The Difference Between an Incident and a Claim
Incident
An injury or accident that occurs during the course of a charter. This can be before the charter begins even on land or after the charter ends on land as well. Sometimes you or your staff may not even know an incident occurred.
Claim
A claim arises from an incident whether it is reported or not. If it is not reported the insurance company can deny coverage. You’ll know when you have a claim because it is a request for compensation either via a lawsuit or compensation for medical bills or some other kind of request for payment. It is possible to have an incident that you and your employees didn’t know occurred; that then arises into a claim.
Right Size Your Policy
You have to ask yourself what you’ll possibly be dealing with. If your company is taking more guests on a larger vessel you will probably want a larger policy to cover the risk since your risk increases with the size of your operation. As a dive operator the likelihood of an incident occurring in the water is increased and so it’s important to have in-water coverage that is commensurate. I am recommending for most operators a minimum of 1 million in coverage however 2 million or more is suggested especially for more established operations. Sometimes it can be difficult to find this amount of coverage.
Excess Policy
Sometimes it can be difficult to get more coverage than you want. Don’t despair! Sometimes you can get what’s called and excess policy. An excess policy allows you to get additional coverage on top of what you already have. This means that in the event of an expensive claim you will still have enough coverage to make the payout.
Finding Coverage
Procuring coverage is getting harder. But do not fear, I have been through the challenge of finding suitable coverage and so now you will benefit from my many many hours spent in this pursuit.
Brokers
There are many brokers out there. Some specialize in marine insurance and some offer all kinds of insurance. Your job is to find the ones that offer dive or snorkel insurance with a high enough limit that covers your kind of vessel while also taking into account your area and way of operating. Whew! This can seem rather daunting but we’ve done the hard work for you so you can cut to the chase and get your application approved and move on with your life as a boat tour operator.
You of course may have a few local brokers that can find you coverage but sometimes their options are limited. Here’s a list of the brokers I have determined can handle most operations. Some will cover in-water group liability and some will only cover Hull P&I. We distinguish between them here for you.
The Best Dive Boat Insurance Brokers
- Gallagher
- DAN
- Johnson Kendall & Johnson
Gallagher is a large insurance group that spans over 130 countries. Odds are they will have a broker that can assist you in finding commercial dive boat insurance. I personally worked with Scott Whitehill at Gallagher after having my insurance Cancelled and he worked diligently to find underwriters who could provide the coverage I needed.
Because Gallagher is so large they have access to quite a few markets. This means that instead of having to shop around at 5 different brokers you can just go to Gallagher and perhaps one other (to get a competitive quote)
We have worked with Scott Whitehill and he’s been really great to work with.
ACW Group is a newer entrant into the maritime insurance offerings. Based out of Seattle and spearheaded by brothers Brett and Nick, they are energetic and fast paced. They are hungry to find you an offering that works for you. If you have a snorkel operation this may be your best bet to find in-water coverage and well as Hull/P&I.
While they don’t have anything on their website about maritime insurance they do offer it. Contact Nick Christman by e-mail: [email protected].
Divers Alert Network is growing over time as other providers are leaving the market. DAN is known for offering training and personal insurance but now offers commercial in-water group liability as well as general liability for your shop. This means if you own a boat you will have to get separate Hull and P&I from another broker like Gallagher or JKJ.
Working with many dive operators, JKJ is able to work with a few underwriters and is recommended by DAN. So if you end up going with a DAN group liability policy you can find your Hull & P&I with these guys. On the downside, they offer First Dive (underwritten by OWL), which is my least favorite company to work with because we were mistreated by them in multiple instances in both my dive and snorkel companies so I can’t say I would recommend them. They do have other options, however, so give those a shot.
Vicencia & Buckley
Vicencia & Buckley are the ‘official’ providers for PADI dive centers. They may be able to help if you’re not a PADI dive center and they may not be able to help even if you are. They are affiliated with HUB which is a maritime insurance broker.
What to Do if Your Insurance is Cancelled
Step 1.
Don’t Panic. This guide is here to help. You may only have 30 days to find a new policy but the brokers named here are likely to have a way to help. Time is of the essence and you’re probably super stressed out. Recognize that it’s a way for your body to perform in a time of need. It’s going to help get you through the process.
Step 2.
If you were cancelled due to an incident, contact a maritime insurance attorney like Jim Alcantara. Jim usually represents the insurance company so he sees the game from the other side of the board. He can help coax the insurance company into providing legal counsel etc. even though they are trying their best to wriggle out of their obligations.
Step 3.
Gather yourself. Get the information you need to procure coverage together somewhere so applications become easy to fill out. You may need to fill out a few. You will need to provide a loss run report. So ask for that as soon as possible as it may take a day or two (or longer) to get it back from the broker. If your insurance was cancelled it was likely due to a recent incident. It is critical that the report only contains claims NOT incidents (see definition above). This is where you can work with the insurance lawyer to figure out what you should and should not report.
Step 4.
Reach out to the brokers listed here to get coverage.
How Do I Decrease the Odds of an Incident?
The more business you do the higher your odds of an incident. Couple this with loose standards and your odds go up even more. Many operators don’t know where to start. This is where DAN’s HIRA course can help. I had to set it up with my personal login since my commercial account would not work. Call DAN is this is the case for you to get setup and the courses added to your dashboard.
HIRA I
The HIRA course is designed for dive tour operators and dive shops. It covers all of the necessary equipment and basic requirements for dive operations. This is the minimum standards you should already be adhering to. If you are meeting these standards it should be quick and painless to get through this taking no more than 2-3 hours.
HIRA II
This is the next level of the HIRA course designed to proactively assess your operation to find ways to mitigate liability. You must complete the HIRA level 1 course first before taking the level 2 course.
It covers making plans for emergencies and environmental stewardship.