So, what IS the best insurance policy for sailing clubs?

I have been providing insurance programs to marine based clubs for over 19 years. If I were to ask that same question to a roomful of insurers and insurance brokers operating in this specialty segment, I’m pretty sure there would be a deafening buzz as each of them tried to confirm that their own pet policy or scheme is the very best. used to be. insurance option for sailing, yachting, cruising and any other marine club. An array of whistles, bells and other rinky-dinks would be paraded in great detail, no doubt rendered from the provider’s point of view rather than a sailing club. After all, salespeople have something to sell and are rarely able to resist the opportunity to sell – even when the opportunities are as terrifying as these require sales of heroic proportions – which usually means shouting even louder.

It’s much the same scenario when it comes to insurance marketing in this specialized part of the marine leisure industry. There is a lot of noise from an increasing number of participants, all trying to attract attention by being noisier than everyone else. Lots of noise but very little differentiation and everyone offers “tailor-made” coverage with many “unique” features. How on earth is a sailing club committee supposed to decide what the best option is for their club and its members?

It is against this background that in April this year the Royal Yachting Association (RYA) announced changes to the insurance requirements for their approved training centres: Public Liability (PL) will be increased to a minimum indemnity limit of £3,000,000 and, more importantly , Approved centers would be required to bear £500,000 of professional liability (PI) in relation to their training activities.

At first glance, this seemed like a wise move. First and foremost, while a trend of “indemnity creep” has seen PL limits push upwards in recent years, a £3,000,000 PL limit is currently seen as the sensible minimum to carry around. Secondly, professional services, including “consultancy”, are specifically excluded under the normal PL insurance formulations (including marine leisure policies) where they are provided for a fee and, of course, where training is provided for a fee, any advice would be expect to be taught by an instructor. Training and advice are therefore normally insured on a PI policy and the new requirement therefore seemed a sensible move.

One can only speculate how the announcement of the new requirements was received by training centers – particularly the non-profit grassroots sailing clubs for whom every pound counts. An increase in PL Insurance to a cap of £3m probably wouldn’t break the bank, but PI might be a different matter entirely. First, PI in the marine sector can be expensive even for relatively low coverage limits due to limited market appetite. Second, when children and/or vulnerable adults are involved in activities, the market appetite decreases even more, creating even more scarcity which can lead to even higher prices.

If the clubs have received the news less than enthusiastically, one wonders how certain insurers and insurance brokers would have reacted to the prospect of something of a game changer being announced – for exactly the same reasons as above. Insurers because PI is anathema to many and, brokers, because it wouldn’t be easy to access a market willing to offer palatable rates in exchange for the required coverage.

No doubt everyone breathed a huge sigh of relief when, just 5 months later, in September, the RYA announced that professional indemnity insurance would not be a requirement after all, as long as a center’s civil liability insurance included an extension covering their training activities, including indemnification for physical injury to participants.

Ensure that the fine print in policy texts is carefully scanned by interested parties to ensure they comply with the following requirements to be implemented by February 1, 2016:

“The purpose of civil liability insurance is to indemnify the RTC and its instructors when a third party (which may be a student, customer or a member of the public) suffers personal injury or damage to their property as a result of the RTCs or Instructor’s negligent act or omission, and RTC and/or its Instructors is/are obligated to defend the injured party and/or pay damages. negligent advice or instruction given by the RTC or its instructors causes personal injury or other damage or loss and the RTC and/or its instructors are required to defend the claim and/or pay damages” (RYA Training Notice TN 07-15 of Sept. 7, 2015).

Conveniently, the statement tells everyone exactly what the purpose of the PL coverage is. So how do we reconcile this with the exclusions in the field of training and advice? Well, insurers have approached this in different ways. For example, it is claimed that as long as they list “Training” in the company description on their coverage schedule, the explicit exclusion in their policy text would not apply to the club or center in question. Another applies what I consider to be a “safer” option for the club by issuing a specific endorsement that confirms that tuition is covered.

See also  The cost of assisted living can eat through your nest egg

So, everything in order: the center will be reimbursed in case of damage to third parties caused by negligent acts or omissions of their instructors with regard to the advice and instructions provided. Yes? Well, actually not necessarily.

Remember all those underwriters and insurance brokers before who were yelling who had the best features and benefits? Well, it’s time to grit your teeth and listen to what some of them have to say, especially about “Bodily Injury”. One insurer defines bodily injury as including “Death, illness, disease or nervous shock”. Another defines it as simply “death, injury or illness”. Another third as “Any bodily injury to any third party, including death, illness, disease, mental injury, distress or shock resulting from such bodily injury”.

If you’re not dozing off, you might see the [not so] subtle differences between the 3 definitions. The first contains Nervous Shock, but what exactly is that? Well, the legal definition of nervous shock is a mental illness that goes beyond sadness or emotional distress to a recognized mental illness. This contrasts with the third example which includes mental injury, anxiety or shock which are not as advanced as nervous shock and thus may provide better coverage as if any of the conditions described develop into a mental illness then coverage would still be always be effective. Conversely, the first does not state that a nervous shock must result from physical injury, while the third example only refers to mental injury, fear, or shock (and illness or disease) if it results from physical injury. The second definition does not provide coverage for any form of mental disorder or illness.

So, which option would you prefer or does it even matter to you, your club or your members? At the end of the day, they all seem to “tick” as far as the RYA’s intent is.

However, we must consider what the purpose of the insurance is. Is it to indemnify the club, center and instructors in the event of injuries incurred during the training itself – i.e. during the actual instruction on and off the water – or something more? What about the effectiveness of the training? What if someone sustains an injury or damage a few months after training and claims it was the result of an error or omission during training? In this scenario, the club or center would almost certainly have no protection from their public liability insurance policy.

In addition, the extract from RYA Training Notice TN 07-15 (above) calls for coverage in respect of “other damage or loss”. While damage to third party property would normally be indemnified, “other damage” presumably means some form of loss (e.g. purely financial) other than injury or damage which would not in fact be covered by the PL section and would normally be a PI require policies to protect this type of liability.

Let’s look at some other scenarios that could affect clubs and their commissions:

Imagine there is an incident in a club or center where a trainee is seriously injured and the center is prosecuted by the Health & Safety Executive (HSE). What if the PL cover you thought would cover £3 million has an internal cap of £50,000 covering legal costs for HSE prosecutions and doesn’t cover awards? £50,000 is soon eaten up in legal fees. But hey – the cover “checks the box”.

In addition, after the incident, the HSE is not only prosecuting the legal entity that is the training center, but also prosecuting the directors and/or officers of the club itself. There is no protection for them under their PL insurance, not even for legal fees.

A club board decides to take the step of suspending a member who then decides to take legal action against the club; a volunteer or employee of a club sues the club for harassment or discrimination, a group of members decide to take legal action against the officers of a club because they feel the officers have not acted in the best interests of the club or its members. Here we see more examples where there is no protection for the club or its officers under the club’s PL insurance – but it “checks the box”.

See also  Importance of health insurance transferability

“Tick” insurance may be low in price – often a driver for a club looking for an economical solution – but don’t provide the tailored, gap-free protection that club officials in the 21st century may want.

5 Questions Sailing Club Managers and Officers Should Ask Themselves Before Deciding on the Best Insurance for Sailing Clubs

1. What are the long-term goals of my club and members?

2. If the club were to be prosecuted, how would it finance its defence?

3. If the club were to receive damages beyond the scope of its third-party liability insurance, how would it pay those fees?

4. How would I defend allegations and accusations against me for decisions, errors and omissions made in my capacity as a club official?

5. Do I want to put my personal property at risk, during my tenure as a club official or after I retire?

These are just some of the questions you can ask yourself as a club official that will help you determine the level of protection you would like to invest in achieving the goals of your club, its members and yourself. For some, these issues will be important, others will see them as irrelevant, and if they are important, the concept of value will often take precedence over that of bottom-line price.

Value, of course, is in the eye of the beholder, but still I would take the risk that the “Best Value” solution is a program that is fully aligned with your objectives, backed by good security, and delivered at the best premium available – in short, the best insurance for your sailing club. The differences in definitions in policy formulations and the variance in the scope of coverage outlined above suggest that a single “off-the-peg” policy offering a one-size-fits-all solution that is anything but bespoke may not necessarily the best. best option for your club or center.