Dive Equipment Insurance Claims

After she traded in her Nikonos underwater camera for a digital SLR system, Undercurrent reader Barbara Shively (La Plata, MD) decided to buy dive equipment insurance for both her and her husband’s dive cameras and computers. She bought it at H20insurance.com, sponsored by Divers Alert Network (DAN). While on a night dive in Grand Turk in November 2005, Shiveley had a major flood in her underwater camera system. She immediately filed a claim and got a reimbursement check soon after with no red tape involved. “Once I supplied them with the requested documentation, my claim was handled to my complete satisfaction.”

Shiveley was one of many Undercurrent subscribers who wrote in about their experience with dive insurance claims. Besides DAN’s H20, other readers have purchased insurance through the Dive Equipment Protection Plan (DEPP) or listed their gear on homeowner insurance policies. The majority have been pleased with the results. But for those of you who have not yet insured your dive gear, there are issues to consider before buying a policy. Would you prefer a check to cover damages, or have your gear repaired or replaced? Will filing a claim affect your policy? Read on to contrast and compare policies.

H20: Check is in the mail

Both H20 and DEPP insure loss or injury to any dive gear you’re wearing or using worldwide. DEPP and H20 vary in coverage, premiums and exclusions. H20’s minimum premium is $100 and covers up to $6,667 worth of gear. DEPP has a minimum premium of $30 insuring up to $2,000. For equipment valued at more than $5,000, it has a 4 percent surcharge. Standard deductibles are $100 for H20 and $25 for DEPP.

Another difference is that H20 will send you a check based on the cost of restoring or replacing your loss, while DEPP repairs or replaces your gear. Betty Orr, director of insurance services at DAN Services, says H20 is better at paying checks than repairing gear. “This is a relatively new offering so we’re still educating our underwriter [Senn, Dunn, Marsh, Roland LLC in North Carolina].” She says reimbursement checks are typically mailed within 30 days. “This also lets you support your local dive shop and maybe even upgrade.”

H20 Insurance requires serial numbers of any item insured for more than $2,500. The standard deductible is $100, except for water damage, then it’s either 10 percent of the claim or $250, whichever is greater. Low-value items like gloves, booties, and dive bags can be declared as miscellaneous equipment for up to $500. H20 covers items to the declared amount, paying the lesser of the cost of replacing or restoring, although reader Michael Hofman (San Francisco, CA) has an issue with that cost versus his H20 premium. “When I flooded my Olympus C4040, they just gave me what the depreciated value was worth, about $30.” He was told the claim takes into account the current value of the equipment, not the original price of $600. “The policy price was not inexpensive so I realized that the insurance is not worth it for me. Now, I ‘self insure.’”

Jay Haldeman, vice president of Senn, Dunn, Marsh, Roland LLC, H20 Insurance’s underwriter, says the policy does indeed base the replacement cost on the acquisition or purchase price, not the depreciated value. However, adjusters are always researching equipment costs and finding that the cost to buy high-tech gear consistently goes down. “That digital camera you paid $500 for three years ago will be cheaper today, so you can buy a similar camera that does the same things or more for a lesser price.”

DEPP: Replace or Repair

DEPP, on the other hand, has an extensive list of equipment suppliers it uses to repair or replace gear, says Dixie Lehrmitt, who handles enrollment. Even though it’s not for those who prefer cash back, readers rated DEPP good on follow- through. Ed Kincaid (Fayetteville, GA) had his dive lights and dive computers stolen out of his luggage on a return trip from Cozumel two years ago. He filed a claim with the airline and received just a fraction of the costs. He also reported it to DEPP and a week later he had new equipment.

It’s not as easy for older gear that has been discontinued and is hard to find. Linda Rutherford (Montara, CA) felt like DEPP left her hanging after she flooded her Olympus 7070 camera, insured for $400. DEPP offered to replace it but Olympus had discontinued the entire line and had no comparable product. Then DEPP said it would give her $400 to purchase one on eBay. “I kept bidding and losing to people bidding up to $800,” says Rutherford. Finally, she wrote to Olympus and they found a refurbished model she could buy for $400. DEPP’s Lehrmitt says if the gear is discontinued, DEPP will give cash if you can provide a sales receipt. If it’s totally unavailable, Lehrmitt says DEPP will provide an upgrade within the same price range.

Comparisons and Contrasts

H20’s deductible for flooding covers all camera accessories, while DEPP’s policy states that if your camera, lens and strobe are all flooded, you must pay the deductible on each. If the airlines lose your gear, DEPP provides $150 reimbursement for rental gear until your bags are found. H20 doesn’t offer that.

Regarding dive watches, DEPP’s fine print states they must be designed and exclusively used for diving and diverelated activities to be insured, and only up to $500. H20 doesn’t have this limitation but DAN’s Orr says multiple claims filed for lost Rolexes in the first two years that H20 Insurance was offered led DAN to eliminate coverage for “mysterious disappearances.” “Those apply to situations when you thought you had put your tank in the outbuilding but it disappeared, or you jumped off the boat with camera in hand but came back empty-handed,” she said. “A few people who lost their Rolexes ruined it for everybody else.” Both H20 and DEPP say their insurance only covers definitive incidents such as crushed gear and flooded cameras. Filing a police report is a requirement if you’re claiming due to theft.

Don’t assume DAN’s dive accident insurance will cover your gear in all situations. Readers Bob and Marilyn Puschinsky (Seabrook, TX) found out the hard way when their gear literally went up in flames. “We lost a lot of equipment when the Maldives liveaboard we were on last February caught fire, exploded and sank into the Indian Ocean with everything on board,” says Bob. They had DAN’s Preferred Plan, which only covers equipment loss when a diver is in the water. “DAN covered nothing, although our State Farm homeowners’ policy covered everything, less the deductible.”

Orr says many people are confused about the differences between DAN’s dive accident and dive equipment insurance, but the latter would have covered this. “Accident insurance only covers dive accidents,” she says. “A boat catching on fire is horrifying but it’s not a diving accident.”

Watch Your Premiums

Many readers also insure gear through their homeowners’ policies. More expensive equipment can be placed as listed assets. The upside is that your gear is covered even when it leaves the house. If it’s stolen out of the trunk of your car or goes up in flames in the Indian Ocean, the carrier will reimburse at replacement value.

But beware of the effect dive gear claims will have on your premiums. Reader David Morris (Fort Worth, TX) had used both DEPP and H20 to insure his gear but, thinking them too pricey, decided to add dive camera equipment to his Allstate home policy as a listed asset. “It was all-risks coverage without any deductible and cheap – I covered $4,000 of equipment for $39 a year.” Then in 2005, his camera was stolen topside in Kosrae. The claim amount was $750, on the edge of being so small that Morris almost didn’t make the claim. In April, his policy renewals arrived and the premium increases were a big surprise. “A 30 percent premium increase over three years would cost me $800. But at the time of my claim, I was told that even if I had withdrawn my claim, it was ‘in the system’ and would count against me.” So while it appeared that Morris was saving money by not using DEPP or DAN, that was only true if he had no claim. “My claim’s eventual impact on future premiums was much larger than the amount of the check I got. I am changing carriers, of course.”

He may have no more luck if he goes to another carrier, says Eric M. Goldberg, assistant general counsel for the American Insurance Association. Each carrier has different rules and typically don’t disclose them. “Some may do nothing, others impose a surcharge, and still others will put you into a different ratings classification.” That’s why it’s important to compare your deductible to the amount of your claim, he says. “Say your deductible is $1,000 and your stolen regulator was $1,400 – does it make sense to file a claim?”

Both DEPP and H20 Insurance say the benefit of their policies is that claims to them will never jeopardize your home insurance. Still, a few readers complain that the policies are pricey for just a year’s worth of coverage at a time. Reader James Heimer (Houston, TX) also questions the latest round of premium hikes. “Close inspection of my most recent renewal policy indicates more exclusions, higher deductibles and less generous settlement terms, especially in cases of water damage. These are general provisions, not anything having to do with having filed a claim. My suspicion is that their claim history indicated they were being a bit generous in their settlement costs versus their premiums.”

H20’s Haldeman admits rates did go from $1.50 per $100 in gear to $2.25, then $3, but the last increase was in December of 2003. “When we first started, there was no actuarial data, so coverage was extremely broad. What we found was that a couple of very large claims jeopardized the entire integrity of the program.” Those missing Rolex watches, no doubt. But Haldeman says his firm is not planning any new premium hikes for now. “We’re sensitive to the fact that dive insurance is not like auto insurance and that not everyone renews on an annual basis.”

Whether you renew or are thinking of insuring your gear for the first time, take all factors – premium cost, coverage type and exclusions -- into consideration. If you only take one or two trips a year, do you really need coverage? On the other hand, is it worth filing a claim on your homeowner policy when the ultimate cost will be more than a stolen camera? DEPP and H20 have served their members well with few complaints but when it comes to any type of insurance, think carefully before you purchase -- and before you file that claim.