Understanding Your Insurance Coverage, Your Options and Conflicts in Coverage
Carol Christini, M.A., President, Insurance Management Services, Inc.
Each year when you purchase insurance, coverage and service is not the only issue to consider. Differences in policy wordings may impact you and your dive business. In addition, it is important that you know your training agency will accept the insurance that you purchase.
Reviewing the history of insurance in diving reveals that in the early 70’s the legal climate began to change in the United States. Prior to that time no insurance was available or required. In response to the liability changes, the training agencies began to offer insurance to their members because insurance was not available from the agent around the corner. Because coverage was not available initially the coverage was based upon the specific training agencies’ standards. Practically 40 years later, coverage for those working in the diving industry remains a unique and specialized coverage that is available only from limited sources. However, now coverage is based upon the respective training agencies’ standards, national standards (RSTC) and international standards (WRSTC and/or ISO).
Here are a few are ways you can determine for yourself what is the best coverage for you. Understanding will help you be an informed insurance consumer.
There are five major sections to any insurance policy wording.
1) Agreement, outlines the intent of the coverage and who is insured
2) Exclusions, advises what is not covered
3) Policy Form, explains if the policy is a claims made or an occurrence form
4) Warranties, states agreed expectations and are a requirement of coverage
5) Conditions, details requirements placed on the insured
The brochure you receive with your insurance application or posted on the website of your insurance representative or training agency should spell out this information. It will also provide other information such as: the insured (the association), the insured certificate holder (you the diving professional or dive business), additional insureds, and which insurance carrier, underwriter or company is providing the coverage. It should address the policy period and total cost, as well as conditions placed upon you if you are involved in an incident or accident. Also it should explain any restrictions or limitations on additional insureds. If the insurance brochure does not outline all of this information— buyer beware!
Exclusions
No policy covers everything. Insurance policies are written to cover only very specific situations. Every policy, even your homeowners and auto insurance policy, contains exclusions in coverage. Therefore, you have to read the exclusions, which describe those situations not covered under your professional liability policy. Professional liability policies may exclude situations considered outside the scope of your “professional trade” such as employment related issues, equipment product liability, or boat operations. Business liability policies may exclude professional liability. Watch carefully for items excluded which are a specific part of your activities. Typically items excluded may be available under another type of policy.
Warranties
Warranties are specific to the type of “industry” the policy pertains to and will spell out standards within the industry the insured is expected to adhere to. Many of the warranties in scuba professional liability policies address standards or expectations within the scope of supervision of, orientation to and instruction in scuba diving activities. For example: warranties will address the need for use of waivers, supervision of entry-level divers during training and industry expectations for medical screening. Seasoned professionals within the diving industry understand these warranties as part the normal “standard operating procedures.”
If you are multi-certified (teaching for more than one training agency), I caution you about limitations specific to one agency’s training standards. This could restrict or eliminate coverage under the insurance when you are adhering to the “another training agency’s standard while teaching another agencies course.” The warranties are professional expectations and as a warranty, you agree to abide by them. Intentional violations of these warranties can void your coverage. The fewer the warranties — the less likelihood you could do something to void your coverage.
Conditions
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Additional Insured Requirements and Special Wording for Additional Insured’s
Many training agencies, retail businesses, pools, charter boat operators and bodies of water require to be listed on your professional liability policy as an additional insured. Why? Because your activities as a diving professional can bring liability exposure to their business entity that is not specifically covered elsewhere. Additional insureds should be given broad protection under the policy arising from the action of the insured (professional or business) that leads to the additional insured being named in a legal action. Additional insureds should have coverage that protects them for their own acts, errors or omissions if they cause the problem.
How can you know for yourself?
Read carefully the brochure especially the exclusions and warranties, as well as coverage for additional insureds. When you purchase insurance this year make sure before you buy that it will adequately protect you, your training agency. Don’t assume that anything you buy will adequately protect you and will be accepted by your training agency as meeting their requirements for liability insurance. Ask your training agency prior to purchasing insurance if the coverage you intend to buy will meet their requirements. They will tell you if they have been provided a copy of the policy wording for review and if it is acceptable. If you represent several training agencies, check to see which policy will be the broadest protection for you and the training agencies. Most importantly, is the coverage acceptable to the training agency that you certify the most students.
Carol Christini has offering insurance and risk management guidance to the diving industry for 25 years. She is a diver and understands both insurance and diving. She or other IMS staff can be reached for further questions regarding insurance at 800-467-7282.
Training Standard questions should be addressed directly to your training agency.