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April 2011    Download the Entire Issue (PDF) Available to the Public Vol. 37, No. 4   RSS Feed for Undercurrent Issues
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How to Insure Your Dive Equipment

readers debate: homeowners insurance or a separate policy?

from the April, 2011 issue of Undercurrent   Subscribe Now

In January, we sent our regular e-mail to subscribers and friends, asking about their experience with dive equipment insurance. We wanted to know if they filed a claim, and if so, whether their insurer had come through for them. We also wanted to know whether they preferred a separate policy for their gear, or were fine insuring it through their homeowners policy. The replies were split. Half the readers relied on their homeowners policy, others sprung for a dive-equipment policy. The majority were happy with the option they chose, while a few had complaints about how their insurer treated them.

"Why Should I Buy Additional Insurance?"

Many Undercurrent subscribers who relied on homeowners insurance were happy divers. When a rogue wave in Bonaire picked up Doug Welsch (Fennville, MI) during a shore entry and slammed him into the rocks, his camera and strobe were ruined. "My insurance agent said my equipment was covered, less the $200 deductible. As long as it is an 'accident,' my personal items are covered while I am traveling. This was covered to the tune of $2,200. With that kind of coverage, why should I buy additional insurance?"

John Dale Kennedy (Springfield, IL) finds scuba gear insurance too expensive. "I went to my homeowners insurer, Cincinnati Insurance Companies, and they added my gear on with an additional premium. I gave them lists of equipment with an estimated replacement cost. We finally settled on $4,000 worth for $80 annually. No deductable, no depreciation, and this is replacement cost. I thought this was a pretty good deal."

We wrote about Eric Ressner (St. Louis, MO) losing his gear aboard the Belize Aggressor last year (see the September 2010 article "The Unprofessional Side of Losing Blame") and he says dealing with his home insurance firm, Travelers, was easier than dealing with the Aggressor people. "Our theft loss came to $3,700 replacement value. To document ownership of the stolen items, we put together original invoices, reconstructed invoices obtained from our dive shop, and photos taken by us or the liveaboard photo pro showing us using the gear. Our insurance company verified our claim, and reimbursed us promptly for the gear's depreciated value - - 70 percent of the loss - - minus our deductible. We had replacement value insurance, so when we provided receipts for replacement items, we received the remaining 30 percent, minus the deductible." Aggressor Fleet president Wayne Hasson refused to reimburse for the deductible, claiming the items could not have been stolen from the Aggressor or the boat's dock.

A few years ago, Scott Addison (Sacramento, CA) compared his home insurer, State Farm, and dive equipment policies offered by Divers Alert Network (DAN) and Dive Equipment Protection Plan (DEPP). He tallied up the value of his scuba gear, more than $8,000. His DAN quote was more than $240 a year. "The deductible was $250 or 10 percent of the total amount, whichever is greater for a flood claim, and $100 for other losses. The State Farm policy premium was $97, with no deductible, and covered flooding, theft, lost luggage and accidental damage." However, Addison had to call two State Farm agents. The first said flooding wasn't covered, but "the second agent called the underwriter directly who said he could underwrite the policy. If I went with the DAN policy and my $500 Olympus camera flooded, I would have paid a $243 premium plus a $250 deductible - - $493 for a $500 claim. It just didn't seem worth it, only in the event of theft." As for State Farm, Addison says, "I cannot be sure if I will have problems with any claims, but I am working with a reputable insurance company, so I do not expect any."

"Just Asking a Question Is Considered a Claim"

Don't be too sure, other readers warn. "There are perils associated with using your homeowners policy to cover items of much smaller value than your home itself," says Paul Selden (Portage, MI.) "Once you file a claim for anything, red flags go up," and may result in your homeowner's insurance being cancelled or put on a 'watch' status."

For years, Dan Clements (Everett, WA) covered $30,000 of gear on a State Farm homeowners policy. Then someone broke into his car and stole his cell phone and GPS unit. "My $600 claim resulted in a call from State Farm, asking us to raise our deductible to $1,000. My agent indicated that after a claim, a flag goes up because State Farm actuaries seem to think a bigger claim is in the works. She said if I submitted a claim for diving or underwater camera gear, my policy would likely be cancelled. As a result, I transferred coverage from State Farm to the DAN policy."

Homeowners who use their dive gear for professional purposes may be out of luck, advises Jeanne B. Sleeper (Laguna Beach, CA). "Because I sell images, my cameras and dive gear would probably be considered business use, so my insurance company, Farmers, is likely to deny coverage." She also says many homeowners policies become secondary coverage if there is coverage ahead of them. "And don't even call and ask if you have coverage on a loss or potential loss, because a call to just to ask a question can be defined as a claim. My $1,500-peryear policy's renewal came in at $2,200. When I called to ask why, my file listed three claims. I have not filed a claim on any homeowner's policy since 1984, but I did call and ask coverage questions that one year." She too insures her dive gear under DAN.

"If you are shopping for a new homeowners
policy, that claim on your dive gear will
negatively affect your rates."

Jim Morus (Independence, OH) filed a claim after his gear was stolen in Bonaire, and became a tough and shrewd negotiator. "Farmers was reasonable but uneducated on brands and buying locally to obtain warranty service with 'free' parts. They offered me less than 25 percent of the retail cost of acquiring new 'like' equipment. They had priced the cheapest of everything online from LeisurePro. I countered with local dealer pricing for similar gear, and an hour-long discussion about the yearly service, the necessity for it and the ability to talk to a person when there were problems. I showed them dive shop pricing for the 'free' yearly maintenance parts, and told them as long as they were willing to reimburse me yearly for the parts that my local dive shop would make me pay for, I might consider their offer. I reminded them that regulators and dive computers were life-support items, and I would require them to sign a contract that their insistence on our buying generic life-support items would mean that should something fail, they would be liable for damages. Over a two-week negotiation, while they checked into my claims with local dive shops, they relented. We negotiated like adults to attain a satisfactory conclusion."

"It's Money Wisely Spent"

Other subscribers wrote to say how happy they were with their DAN and DEPP policies. "I have carried DAN equipment insurance on my underwater camera gear and dive computers for several years," says Barbara Shiveley (LA Plata, MD). "Twice I have made claims because of flooding of my camera housings, and I have been completely satisfied with the response. The premiums are well within reason and the service is excellent."

"I have had two claims on my DAN policy, one for a flooded digital camera and one for equipment stolen at the airport after TSA broke off the lock," says Ed Druy (Owings Mills, MD). "For the camera loss, I had to bring the body and lens to a camera repair facility to have them certify it was beyond repair. For the stolen equipment, I sent in a photo of the TSA-certified lock that was broken off and left behind in the bag. In both cases, I had my check within 10 days."

"I've had my equipment insured with DEPP for many years and have found the premiums to be a worthwhile investment," says Gabriel I. PeŮagarŪcano (San Juan, PR). "On the few occasions when I have filed a claim, they have been processed most satisfactorily."

"I Feel Like I've Been Taken for a Ride"

However, we did get complaints about the downsides of dive gear insurance. Raymond E. Moore (Independence, MO) had one a few years back and realized "that if I had other coverage, DEPP would be secondary. Come to find out, my homeowners insurance covered almost all my risk, except for the high deductible, which was covered by the dive equipment insurance. Also, DEPP covered accidental overboard (which was covered by my homeowners) and covered intentionally ditching my gear while in the water (which homeowners did not cover). Frankly, the only item I would ever ditch would be the weights, which are rented and not covered by the dive insurance anyway. Equipment insurance is kind of a rip-off."

Other readers complained about the lack of detail DEPP offers in its online-only insurance application. Robert Kosty (Danvers, MA) had $18,000 of equipment insured by DEPP for three years. "The policy is obtained strictly through an on-line application, and although I received confirmation of coverage, I do not recall receiving the policy." But Kosty found out the hard way that dive insurance companies don't bend the rules stated in their policies, particularly when it comes to filing deadlines. Last year, he submitted a flooded-camera claim for $500. "I was not timely in reporting the loss (within 60 days of the incident) but I notified DEPP that I had a loss and would document it at a later date. When I later submitted my claim, I was told it had been closed because documentation had not been timely."

That's because it took him five months to get back to DEPP with the documentation, says Deane W. Lehrmitt, CEO of Innovation Programs Group, Inc., broker for the DEPP program. "The requirement is to file a claim within 60 days of the occurrence, which enables us to mitigate potential losses by possibly being able to repair flooded items before they are declared [unusable]." DEPP also requires customers to send flooded items to their designated repair facility within five days of the occurrence, or DEPP enforces a penalty in the claim adjudication. "The terms and conditions of the policy are filed with the regulatory agency, and we must apply the terms and conditions unilaterally, without bias."

Lehrmitt says every customer is given the opportunity to download the policy with their enrollment confirmation. "If any customer asks for an additional copy of the policy, or failed to download the policy with their enrollment confirmation, we promptly send them one for their review."

One of our readers says she has been waiting for a resolution on her DEPP claim for a damaged camera for more than four months. "They say that the delay is due to their underwriter requiring them to 'manage' the claims, but I feel like I have been taken for a ride." However, we were told by Lehrmitt that she has filed more claims than any customer in the program. "When she filed her latest claim, we advised her we would be investigating the circumstances of that claim, as her claim experience has been extremely adverse. We also wanted to know the extent of the damage to the camera body. We were not provided that information from her camera manufacturer until this February and her claim has been authorized, and we are trying to locate replacement equipment under the terms and conditions of the policy."

Ron Lagerlof (Los Angeles, CA) cc'ed Chartis Insurance, the holder of his DiveAssure policy, on the e-mail he sent to us about its lack of response to his claim for checked dive gear lost during travel from LAX to Bangalore for a Maldives dive trip. He filled out paperwork with Lufthansa at the Bangalore airport and rented gear in the Maldives. "The luggage was never found, but Lufthansa paid out $1,500, the maximum allowed. I then followed up with Chartis. For being a DiveAssure 'Diamond Member,' I had paid extra for multi-trip travel coverage, which brings with it $5,000 coverage for 'personal diving equipment.' On January 31, I received a letter from Chartis stating that as the 'airline lost your luggage while in route to your destination, the DiveAssure policy does not provide coverage for this type of loss.' So then what does it provide?" He called Chartis customer service and "their first line of defense was to deny, deny, deny. I was told I must submit a written appeal. Incidentally, DiveAssure claims the policy is 'Primary' and states: 'Primary insurance' means your insurer will reimburse you in full for your payments made by you, disregard any other insurance you may have, which may or may not cover the incident. All DiveAssure programs are primary.'"

The same day Lagerlof e-mailed us, we both received an e-mail from Roy Pargament, DiveAssure's customer service manager, who said he would look into the matter with Chartis and update Lagerlof on his findings. A few weeks later, DiveAssure and Chartis again denied his claim.

Which Policy Is Better For You?

While a dive-equipment policy may be a better fit than a homeowners policy for dive gear, even insurance agents debate which is better. Insurance broker and Undercurrent subscriber Tony Kuhnell (Plano TX), wrote, "You need to weigh the potential affect on your current and future homeowners policy rates. If you have a claim on your homeowners insurance, your rates will potentially go up and if you are shopping for a new policy, that claim on your dive gear will negatively affect your rates. I purchase a separate policy for my camera gear rather than have it attached to my homeowners policy as I wouldn't want rates to increase for something I can cover with a different policy."

Bill Noel (Syosset, NY), also an insurance broker, agrees that reliance on a homeowners policy alone for dive gear coverage is a mistake, but read the fine print of an equipment policy, and call for concrete answers. "Buying an equipment policy generally can provide much better and broader coverage, but it is expensive. Policies vary widely in coverage provided, and some of them border on being criminal."

While it isn't cheap, you can get the "personal articles" floater policy added to your homeowners insurance. You must list the individual equipment and value. "The coverage should be as broad as possible. The cost is lower than equipment policies, and the claims are pre-settled to the dollar amount because the policy has the amounts listed," says Noel. If you don't want to pay out for DEPP or DAN, but you don't want to jeopardize your home policy, "this would be the best way to buy coverage for your gear."

- - Vanessa Richardson

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