Legal Law

So what is the best insurance for sailing clubs?

I have provided insurance programs to maritime clubs for over 19 years. If I were to ask that same question to a room full of insurers and brokers operating in this specialist segment, I’m pretty sure there would be a deafening outcry as each sought to claim that their own pet policy or scheme was the one. better. Insurance option for sailing, sailing, cruising and any other maritime club. A series of whistles, bells, and other rinky-dinks would be paraded in great detail, no doubt represented from the vendor’s point of view rather than a yacht club. After all, sellers have something to sell and can rarely resist the opportunity to sell, even when the odds are as dire as this demand for sales of heroic proportions, which usually means yelling even louder.

It’s pretty 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 and each one tries to attract attention by being louder than the others. Lots of noise but very little differentiation and they all offer a “bespoke” cover with many “unique” features. How the heck can a sailing club committee decide exactly what is the best option for its club and its members?

It is in this context that in April this year the Royal Yachting Association (RYA) announced changes to the insurance requirements for its approved training centers: Public Liability (PL) which will be increased to a minimum compensation limit of £ 3,000,000 and, of greater interest, Approved Centers would need to carry £ 500,000 of Professional Indemnity (PI) coverage in respect of their training activities.

Prima Facie, this seemed to be a delicate move. First, although a trend of “progressive increase in compensation” has seen PL limits rise in recent years, a PL limit of £ 3,000,000 is currently considered the sensible minimum to carry. Second, professional services, including “advice”, are specifically excluded from normal PL Insurance wording (including marine leisure policies) when provided for a fee and obviously when training is delivered for a fee. , one would expect to receive some advice. be taught by an instructor. Therefore, training and advice are normally insured in an IP policy, so the new requirement seemed to be a delicate move.

One can only speculate how the announcement of the new requirements was received by training centers, particularly non-profit grassroots boating clubs, for whom every pound counts. An increase in PL Insurance to a cap of £ 3 million probably wouldn’t break the bank, but PI could, perhaps, be an entirely different matter. First, IP in the maritime 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 further creating additional scarcity that could lead to even higher prices.

If clubs received the news less enthusiastically, one wonders how certain insurers and brokers might have reacted to the prospect of what appeared to be a game changer announced, for precisely the same reasons mentioned above. Insurers because PI is anathema to many of them and, brokers, because accessing a market prepared to offer desirable rates in exchange for the required coverage scope would not be easy.

To be sure, 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 person’s Liability insurance center had an extension that covered their training. activities that include compensation for bodily injury to participants.

Please provide a meticulous scan of the fine print in policy writing by stakeholders to ensure they meet the following requirements to be implemented by February 1, 2016:

“The purpose of liability insurance is to indemnify the RTC and its instructors when a third party (which could be a student, client, or member of the public) suffers personal injury or damage to their property as a result of the RTC or the instructor’s acts. or negligent omissions, and the RTC and / or its instructors are obligated to defend and / or pay damages to the injured party. Therefore, the RTC must ensure that all instructors employed or directly contracted by the RTC are covered RTC’s public liability insurance policy. RTC’s liability insurance should be extended to indemnify the RTC and its instructors when negligent advice or instruction given by the RTC or its instructors causes personal injury or other damage or losses and the RTC and / or its instructors are required to defend the claim and / or pay damages “(RYA TN 07-15 Training Notice dated September 7 September 2015).

Fortunately, the statement tells everyone precisely what the purpose of the PL cover is. So how do we reconcile this with the training and counseling exclusions? Well, insurers have approached this in a number of ways. One, for example, argues that as long as they state “Training” in the business description of their coverage program, the explicit exclusion in the wording of their policy would not apply to the club or facility in question. Another applies what I consider to be a “more secure” option for the club by providing specific endorsement confirming that tuition is covered.

Then all is well: the center is compensated in case of damages to third parties caused by negligent acts or omissions on the part of its instructors with respect to the advice and instruction provided. Yes? Well actually, not necessarily.

Remember all those insurers and brokers who used to scream about who had the best features and benefits? Well, it’s time to grit your teeth and hear what some of them have to say, particularly about “Bodily Injury.” An insurer defines bodily injury as “Death, Illness, Illness, or Nervous Shock.” Another defines it simply as “Death, Injury or Illness.” One third as “All physical harm to a Third Party including death, disease, illness, mental harm, anguish or shock resulting from such physical harm.”

If you have not fallen asleep, you may see the [not so] subtle differences between the 3 definitions. The first includes Nervous Shock, but what exactly is it? Well, the legal definition of nervous shock is a mental condition that extends beyond emotional pain or distress to a recognized mental illness. This is in contrast to the third example, which includes mental injuries, distress or shock that are not conditions as advanced as Nervous Shock and therefore potentially provide a better scope of coverage, since if any of the conditions described would progress to a mental illness, the coverage would still be effective. In contrast, the first does not state that Nervous Shock must be the result of a physical injury, while the third example will only cover mental injury, distress or shock (and illness or disease) if it is the result of a physical injury. physical injury. The second definition does not provide coverage for any form of mental distress or illness.

So which option would you prefer or even matter to you, your club or your members? At the end of the day, everyone seems to “check the box” as to what the RYA’s intention is.

However, we must consider what the intent of the insurance is. Is it about compensating the club, the center and the instructors in case of injuries that arise during the course of the training itself, that is, during the actual training in and out of the water, or something else? What about the effectiveness of the training? What if someone is injured or injured several months after training and claims it was the result of an error or omission during training? In this scenario, it is almost certain that the club or center would not have protection from its Civil Liability Insurance.

Additionally, the excerpt from RYA TN 07-15 Training Notice (above) asks for coverage with respect to “other damage or loss.” While damage to third party property would normally be covered, “other loss” presumably means some form of loss (eg, purely financial) other than injury or damage that, in fact, would not be covered by Section PL and I would normally require a PI policy to protect this type of liability.

Let’s take a look at some other scenarios that could affect clubs and their committees:

Imagine there is an incident at a club or facility where someone under instruction is seriously injured and the facility is prosecuted by the Health and Safety Executive (HSE). What if the PL coverage that you thought would cover you for £ 3 million has an internal cap of £ 50,000 regarding legal fees for HSE prosecutions and does not cover any awards? £ 50,000 is soon consumed in legal fees. But hey, the cover “meets the requirements.”

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

A club committee decides to take the step of expelling a member who later decides to take legal action against the club; A club volunteer or employee sues the club for harassment or discrimination, a group of members decides to take legal action against club officers because they feel the officers have not acted in the best interest 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 “meets the requirements”.

“Eligible” insurance may come at a low price, often a driver for a club seeking an affordable solution, but it will not offer the seamless protection as club officers might desire in the 21st century.

5 Questions Sailing Club Trustees and Officers Should Ask Before Deciding on the Best Sailing Club Insurance

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

2. If the club were prosecuted, how would you finance your defense?

3. If the club had compensations against you outside the scope of your public liability insurance, how would you comply with those compensations?

4. How will I defend the accusations and accusations made against me for decisions, errors and omissions made in my capacity as a club officer?

5. Do I want to put my personal assets at risk, either during my term as club officer or after I resign?

These are just a few of the questions you can ask yourself as a club officer to help you determine what scope of protection you might want to invest in to meet the goals of your club, your members, and indeed yourself. For some, these issues will be important, others will consider them irrelevant, and if they are important, the concept of value will often prevail over that of final price.

The value, of course, is in the eye of the beholder, but even so, I would risk that the “Best Value” solution is a program that is fully aligned with your goals, backed by good security and delivered with the best Available premium: that is, the best insurance for your yacht club. The differences in definitions in policy wording, as well as the variation in the scope of coverage described above, suggest that a single “out of the box” policy that offers a one-size-fits-all solution that is anything but personalized may not be necessarily the best option. the best option for your club or center.

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