Insurance carried by independent mini ROV operators?

[ncuwi]

Does anyone know what sorts of insurance mini-ROV operators typically carry (in the US)? If we were to perform a routine inspection of a water tank for a local municipality, what insurance should we carry? Liability? Working men compensation? Equipment loss? Are there any marine inspection organizations that offer group packages to their members? I've gotten a couple quotes and the prices I'm seeing are pretty steep, any suggestions on how to reduce costs? Thanks in advance.

[rovsteve]

I have looked at the insurance question from all angles during the past few years and have come away with the following:

1. Coverage for a VideoRay MicroROV system is too expensive to make it viable. Self insurance is best, meaning money from each job goes into a fund to cover equipment loss. Also, when I do a very risky job I ask the client to cover any equipment loss, after explaining the preceived risk. I have never had a client refuse when asked and in over 500 jobs only had to invoke the agreement once.

2. General Business Liability Insurance is very important, I carry a $1 million policy, it costs about $500 per year

3. Since I do not have any employees I don't need workmans comp.

4. Personal health insurance is also important, I have Blue Cross/Blue Shield

5. I have been asked several times to provide Jones Act Insurance coverage, which is workmans comp for mariners. Since I am not a mariner and I have no employees I decline to provide it as coverage.

6. Most clients have a lot of insurance that can cover an independent contractor working on their behalf, When asked for various coverages I discuss it with the client in the terms of, "Yes, I can provide any type of coverage you require, however, this is what it will cost you", with the understanding it's a total pass thru expense over and above any other costs/fees. Normally this results in the request being with drawn. I also ask them to define the exact risk they want me to provide protection/coverage for and what they think could happen that will require insurance. Many times it comes down to the fact that they have always requested it from contractors and no one really knows why. Discussion is the best way to work this issue. Since they are willing to hire you for an important task, they should trust you about this issue and work it out.

Having said the above, if you have employees and lots of gear you may want to think about coverages differently. I'm a one man shop with VideoRay gear that I take care of.

Steve

[ncuwi]

Thanks very much for your insightful reply. After investigating this further I was just about to come to almost the same conclusions that you have. Any recommendations for liability insurance? Most companies I've talked to have no idea what this type of work is all about.

[jconrady]

We inspected tanks and pipelines by diving for 22 years and then by ROV for 5 years as an independent company before our company was purchased by a much larger company. The insurance we carried, which was acceptable to municipalities and companies was $2,000,000.00 liability insurance through Nationwide insurance and a $1,000,000.00 commercial automotive liability insurance through Nationwide. You are also required to carry workers compensation insurance if you have employees.

Coverage for the ROV equipment was so cost prohibitive that it just was not worth it for us. We never lost it or damaged it in over 1,000 inspections and only a few people who we have talked to have completely lost or destroyed their ROV so this is probably just on your dime if you do this so just be very careful!

[rovsteve]

Almost any independent insurance agent can arrange for general liability coverage for $1million. If you have trouble explaining what you do then try JOhn W. Fisk Company, website is www.jwfisk.com. Their phone is 888-486-5411. They specialize in providing coverage for the marine industry.

Also, I forgot to mention that VideoRay has an insurance program for the ROV system called Advantage. This coverage not only covers the equipment loss or damage but any repairs, parts, annual checkup and any upgrades since the purchase, all for one price. However, it does not cover fire or theft. I sometimes recommend this to new users for the first year or so when learning how to use the ROV and to help keep the mind on the job and not worrying about loosing the ROV.

Bottom line, go forth and ROV, don't sweat the small stuff.

Steve

[ncuwi]

Thanks very much Steve and Jconrady, you've been very helpful.

[Jeff Snyder]

Hi guys, figured I would chime in a bit on this as well.

For limits, as has been said:

$1M per occurrence, $2M aggregate is a standard commercial general liability policy that should satisfy most municipalities and water service operators. They will also look for a $1M commercial auto liability policy.

Be careful though, as some agencies are beginning to push up into the $5M range. I've got a client who requires $5M per occurrence and an additional $3M in environmental liability coverage...but I'm in a special situation, because I also own boats that I use to support my survey work. The environmental liability coverage is related to "what should happen if I cause a spill with my boat", and I capture the $5M overall per occurrence with a commercially umbrella policy.

If you stay solo, most states allow owner-operators to be exempt from carrying workman's comp insurance. Once you carry employees, you will need to determine if you must carry workman's comp insurance that is subject to Jones Act or Longshore and Harbor Worker's Act. Jones Act is typically for offshore mariners and crew members...US L&H is for just about anyone who works near a navigable waterway on inland waters in the U.S. Definitely talk to someone about the Jones Act and USL&H coverages to determine if you will need them. There are changes brewing right now as to how the Jones Act will be interpreted by the U.S. Coast Guard - I'm not sure if it will affect insurance coverages, but it is important to discuss the requirements with someone if you intend to venture offshore. (I, like Steve, work alone so I don't carry the coverage on myself...and whenever I have carried subcontractors offshore I have been on U.S. government vessels where Jones Act doesn't apply...theoretically).

Insurance for the equipment isn't horribly expensive...but the problem with it is that the insurance doesn't cover it when it is most important - in other words, the policies won't cover your mini-ROV when it is in the water or 1,000 feet up a pipe. If you finance the gear when you purchase it, just about any financing entity is either going to require you to insure the gear, or they are going to charge you additional to insure it for you. Don't fight with them...because if they figure out what exactly the risks are with the equipment, they may choose to not finance your gear. It might even be worth your while to let them insure it and back-charge you...but like Steve said, definitely look into the Advantage rogram with VideoRay.

One thing not mentioned previously is Professional Liability Insurance...this is also known as Errors and Omissions coverage. I carry Professional Liability Insurance, but that is because I am a hydrographic surveyor (ie, I go out and survey water depths in channels). It's pricey...about 5K a year. But it is necessary because it protects me in the event that I make a mistake. Haven't made one yet...and I hope to keep it that way. I don't know of many mini-ROV operators who carry PL policies because it is entirely possible to avoid situations where errors and omissions could pose a problem. You can avoid it altogether with how you market yourself and how you contract with your clients. For example: be careful with saying that you are doing an "inspection". Inspections imply that there may be a certification of fitness for purpose. There are engineering-diving companies out there that will not call their pier inspection activities "underwater inspections", but rather, will call them "underwater investigations" because they may only be looking at the surface of a fraction of the timber pilings of a pier...and they therefore cannot "certify" the condition of the pier. As long as your clients are aware that your activities are only providing them a visual inspection of the interior of a tank and that there is no guarantee regarding the ultimate fitness of a tank or structure, you should be fine...

I would definitely reach out to companies like John W. Fisk in Louisiana, Northeast Underwriters in Connecticut, and International Special Risks in Massachusetts to discuss your insurance requirements. I work with Northeast Underwriters, their owner (Jim Davidson) is very knowledgeable. He will ask you alot of questions, which is a good thing because a good broker will try to properly focus the insurance coverage and quote so that you get the right kind of coverage that adequately protects you without running you into financial ruin. You will need to watch that Jones Act or US L&H workman's comp issue, plus these folks can help guide you on whether or not you need a Professional Liability policy. Make sure that they understand exactly what you are and are not doing...and make sure that they in turn communicate that to the insurance company.

Good luck.

[DanDolson]

I handle the insurance and contracts for Seattle Diving Company and we carry a pretty broad range of coverages.

Because we have employees, we have three forms of worker's compensation: US Longshoreman's & Harborworker's coverage, Marine Employers Liability, and State act coverage. Our bumbershoot policy covers anything over $1M up to $5M. If a customer requires more than $5M worth of coverage, I ask them to pay for the specific policy that raises the limits for the coverage to whatever level they want. I have yet to have anyone ask for more than $5M, but I am ready for it should it come along.

Typically we have full workman's comp coverage in place for the ROV pilots we send out, even if the guys working for us work as "contractors." A few guys we use have their own ROVs and do their own work for the most part, but also work under our flag. The benefits go both ways for Seattle Diving Company and the ROV pilot: They can do the jobs where insurance requirements are prohibitive and we make some money for covering them.