Dive Vessel Insurance Cost Goes Overboard

Blame the Congress. But YOU CAN MAKE A DIFFERENCE. Help Pass the DIVE BOAT Act

by Tom Ingram, President & CEO, Diving Equipment and Marketing Association (DEMA)

A 2023 change in the law regulating liability for small commercial passenger carrying vessels – especially those used in diving activities – has caused vessel liability insurance rates in the U.S. to skyrocket.  As this cost is eventually passed along to business clients and diving consumers, diving is becoming less affordable. The industry needs the help of all divers and dive professionals to send a message to Congress to correct this issue.

The Small Passenger Vessel Act (SPVA) was enacted as part of the 2023 National Defense Authorization Act (NDAA). This Act dramatically changed the liability requirements for small commercial vessels – those carrying not more than 49 passengers on over-night domestic voyages and those carrying fewer than 150 passengers on any voyage that is not an overnight domestic voyage (day-boats). 

The genesis of SPVA was the tragic 2019 Conception liveaboard boat fire that claimed more than 30 lives. Unfortunately, after going through several iterations, when passed the SPVA contained neither safety recommendations that would prevent future tragedies, nor assistance for the Conception families. Because the SPVA increases the statute of limitations for filing claims on any boat accident to two years (from the previous limitation of six months), it is having dramatic, unintended consequences as it disrupts insurance market risk-pricing models. This increased statute of limitations goes well beyond the typical one-year renewal cycle for vessel liability coverage, with the result that insurance has either become unavailable for vessels in these sizes, or the rates have risen substantially. 

This liability penalty is especially unfair to the diving industry as the horrific accident on the Conception was a boating accident, and it appears that the crew may have violated US Coast Guard regulations. Fishing vessels and cruise ships have been excluded from the SPVA, while dive, snorkel, and tour boat businesses are seeing exponential increases in insurance premiums. The dramatic increase in costs, diverting hard-earned and limited resources from necessary boat maintenance, safety equipment, and staff training is making NO ONE safer. 

Within weeks after enactment, DEMA received alarming information from the dive community: One operator in West Palm Beach, Florida reported a $160,000 increase in their store and vessel liability coverage. They are now paying nearly 10% of their annual cash receipts on insurance. Another reported a $25,000 increase for his two small day vessels – more than double what he paid last year. An operator in Hawaii reported a $40,000 insurance increase, and a dive and travel store with no vessels in Washington, D.C. reported a $40,000 increase.  These insurance increases are having a dramatic impact on livelihood, especially in the face of inflation and rising economic uncertainty.

How Is DEMA Helping?

Working with insurance actuaries and federal lobbyists, DEMA has drafted legislation to change the law enacted earlier this year. The DIVE BOAT Act helps ensure that vessels operating safely and lawfully are not unduly burdened with the threat of unlimited liability for an incident that may have occurred two years prior. The DIVE BOAT Act will:

• Reduce the lookback period for claims from two years to one year for liveaboards (overnight vessels), which is more in line with how insurance premiums are assessed (up from the historic period of six months).
• Remove “day-boats” from the types of vessels subject to heightened liability standards – returning them to the same standards as all other vessel operations, e.g., sport fishing and tow boats.

DEMA believes these changes will ensure bad actors are held accountable, while significantly easing the burden of unfair cost increases for those who follow the rules.

DEMA has been working with members of Congress to provide business relief from these insurance costs and has been successful in obtaining bi-partisan support in the U.S. House for this legislation. BUT THE INDUSTRY MUST ALSO PARTICIPATE IF THIS LAW IS TO BE CHANGED. 

What Steps Can You Take to Help Avoid These Cost Increases?

DEMA NEEDS YOUR HELP in generating awareness and support for The DIVE BOAT Act.  There are several steps you can take:

• Share DEMA’s campaign messages and images with your social media followers, asking for their support of The DIVE BOAT Act. These messages and images are available in DEMA’s DIVE BOAT Act Campaign Resource Center.
• You can also write to your members of Congress directly using this link to DEMA’s legislative software: https://p2a.co/hz3lwzn. A pre-populated message is available, or you can customize your comments, which are easily sent directly to your policymaker.

Everyone in the U.S. involved with the recreational diving industry can participate in this ready-made campaign. More participation WILL make a difference in getting the DIVE BOAT Act across the legislative finish line. Don’t let the SPVA negatively impact EVERY dive business in the U.S.!