Will Your Liveaboard’s Insurance Cover Your Loss?

In June, we reported about a fire aboard the MV Overseas in the Red Sea that resulted in the passengers, though safely evacuated, losing all their possessions. They still are having trouble getting compensation from the vessel's Egyptian operator. Most likely it's because there is no money available and no insurance. They will have to rely on their own travel insurance or homeowner's insurance to cover their losses.

That led to a conversation with an Indian Ocean liveaboard fleet owner whom I've known and trusted for many years and who recently took a new liveaboard into a territory of Indonesia he was unfamiliar with. Sensibly, he put the management of his vessel into the hands of someone who, acting as an agent, had an enviable reputation for operating liveaboards there.

When it came to insurance, our liveaboard owner, who asked to remain anonymous less he lose friends in the business, told us he was shocked when his agent told him he was paying far too great an insurance premium for his vessel. He decided to look into it and was doubly shocked to find that when he looked at the less expensive policy he was recommended, he didn't believe the insurance would adequately cover the people on board. He was equally shocked to discover this minimum coverage was common among similar liveaboards in Indonesia.

It appears that some owners often get coverage for their own losses, that is, the loss of the hull, but more often than not underinsure or even fail to insure the passengers' losses, including their lives or their property.

You might recall the loss of 20 lives in October 2001, when the liveaboard Wave Dancer capsized during a hurricane that hit Belize. DAN insurance covered none of the deceased divers. You see, the tragedy was not a diving accident. The Wave Dancer carried $5 million of insurance, but after the cost of raising the Wave Dancer, less than $4 million was left to be distributed among the families of the 20 dead.

What if, as a passenger, you suffer loss or injury in some way? What if you slip down the steps of a wet companionway and break your back? Are you going to try to take the boat's operator to court, probably in some far-off country -- where most liveaboards are flagged -- with a dubious reputation for legal outcomes?

And, keep in mind, your own insurance will not provide any punitive damages in the case of proven negligence. And pursuing a defendant for pay-out in a distant land can be impossible.

Despite what some may tell you, it's difficult enough to make a profit from a liveaboard business. The least expensive insurance option will always have a seductive appeal to those who have to pay the premium. Would you be prepared to pay a greater cost for your dive trip, if you knew the boat was properly covered to carry passengers?

Some Operators Reply

Undercurrent contacted more than a dozen major liveaboard operators. Those who replied included Galapagos Sky, and Odyssey in Truk, The Siren Fleet, the Atlantis Azores in the Philippines, the Emperor fleet in the Maldives, Worldwide Dive & Sail, and Dewi-Nusantara in Indonesia, all operations with well-established reputations. Replies were similar in that they all had proper Protection and Indemnity insurance, commonly known as P&I. It is insurance for third-party liabilities and expenses arising out of the ownership or operating of vessels. Risks covered include third-party liabilities for cargo, collision, and damage to or loss of property.

Amy Lesh wrote, "Galapagos Sky carries adequate insurance of the vessel and adequate liability insurance. There is also a specific water sports rider as well, due to the activity of scuba diving.

"We do require our passengers to sign a waiver acknowledging our terms and conditions of the transportation contract. Some of our travel agents request a Certificate of Insurance before they book with us and/or ask for an annual update of coverage. We have absolutely no problem providing that."

Cliff Horton for Odyssey in Truk replied to our inquiry, "We carry liability insurance that covers our guests and even our crew in the event of negligence or accidents on our part, for both in water and out of water."

We also had a response from All Star Liveaboards, which has a fleet in the Bahamas that includes Aqua Cat, Cat Ppalu, and Blackbeard, also Cuan Law in the BVI and Aurora in Indonesia. Bruce Purdy wrote, "Our policies have always included liability insurance to cover injury or death on the boat or while diving if from negligence on the part of the boat. (What determines boat negligence is up to the courts.) He offered to send us copies of the certificates.

"I think it is pretty standard for Caribbean boats to have coverage for death or injury on the boat," Bruce continued. "The insurance for the diving isn't on the standard boat policy, but the insurance carriers that handle our boats, and I think that of most of our competitors have, that coverage [is] added on."

Alison Bygrave from Dewi-Nusantara in Indonesia wrote, "It is telling we have only been asked by two agents for this in my whole six years with the boat!" Guido Brink, the owner, added, "I'm very happy that Undercurrent asked this question! Of course, divers have the right to know. Agents and wholesalers should ask this from every dive live-aboard and dive resort that they represent."

Craig Stevens for Mike Ball Diving Expeditions in Queensland, Australia, pointed out that in Australia, commercial operators are regulated by legislation and must have P&I liability insurance with a minimum cover of AUS$200 million.

Alex Bryant with the Emperor fleet, including Emperor Orion, in the Maldives also replied in the affirmative about having Protection and Indemnity insurance cover.

It was the same response from Mark Shandur of the Siren and Master fleets that include Indo Siren and Truk Master. Andy Pope of Atlantis Azores in the Philippines even sent us a copy of its certificate of insurance, adding that he believed many other Filipino liveaboards were often inadequately insured.

We received no reply from the Aggressor Fleet, but note that Aggressor Fleet is essentially a marketing organization and the liveaboards carrying the Aggressor name are individually owned, and each may or may not carry its own insurance. But, for all the other major operators, it seems they might carry $5 million-$10 million coverage for guest liability, presumably enough to cover the guests for injury resulting from negligence. Though, in the case of the Wave Dancer, $4 million for the family of 20 deceased divers, most of whom were the families' breadwinners, was not enough.

And what is the greater cause for concern? Those that do not hold adequate P & I insurance or none at all? Of course, they aren't going to admit that to us.

What the Insurance Guru Said

We contacted Peter Meyer, a well-respected insurance expert with a long history of advising on insurance matters for the diving industry worldwide. Meyer, Partner at Owl Underwriting Agency in Vancouver, BC, old Undercurrent, "Typically, I suggest to all of my dive vessel clients that they should 'require' all their passengers to have personal dive accident insurance (DAN or equivalent) before allowing them on board. In addition, I advise my clients (individuals or dive facilities) who are booking a dive trip on a vessel, or at a resort, to request proof of insurance from the operator (in the form of an Insurance Certificate) showing the coverage carried by the operator. If the operator does not carry appropriate coverage or is not willing to provide proof of coverage, don't go with them!

"We follow the same procedure/suggestion with other types of insurance. For example, I received a request from a U.S.-based retail facility to issue a certificate of his insurance to Hollis Rebreathers as they wanted to become a Hollis dealer and Hollis wanted proof of their coverage before appointing them a dealer. I agreed, on the condition that Hollis also provide a certificate to the retailer showing that Hollis also had insurance for its products."

"The philosophy is quite simple: you need insurance for your own liability exposures (homeowner, diver, retailer, vessel operator, etc.) and the people/businesses you deal with need their own coverage for their own exposures. Going on a trip, or dealing with a business partner, where they do not have their own coverage, is foolish at best."

Back to our unnamed liveaboard operator. He is most concerned about the liveaboard operators in the Indo-Pacific, where he suspects a majority do not maintain appropriate coverage. And, there are other regions as well, as the sinking of the MV Overseas in the Red Sea underlines.

So, if you're concerned about liability insurance, ask your booking agent for evidence of coverage and get the answer in writing. It's extremely unlikely that you'll ever need a liveaboard's insurance coverage, but divers aboard the MV Overseas thought that, as well. So ask the question when you book.

- John Bantin