A man is in Mr. Ernst's office and is telling him his insurance premium is up as of 5pm that day. Mr. E remarks that it is a big increase in the price. The man tells him that insurance is expensive especially for a dude ranch. Jake interrupts and asks if he can use the lodge for "Mondo Courage", his new workshop on how to conquer your fears. Mr. E agrees to let Jake use the lodge. Mr. E tells the insurance man that he thought premiums only went up after an accident and they haven't had an accident all year. The man tells Mr. Ernst that it is his assessment that at a dude ranch the threat of a lawsuit is large. The insurance man points out the woman hanging upside down hanging outside Mr. Ernst's window. Mr. E falls out the window screaming for Jake.
Mr. E confronts Jake who said he had permission to use the lodge. He thought Mondo Courage would be taking place inside the lodge. Mr. E said he almost lost his insurance coverage, he had to swear Mr. Griggs that nothing like this would ever happen again. Mr. Ernst tells Jake that his Mondo Courage is over. Jake points out that the Parkers already paid. Jake says Mrs. Parker is afraid of heights and Mr. Parker is afraid of Mrs. Parker. Mr. E lets Jake continue, but the Parkers can't be any higher than one foot off the ground. Mr. Griggs comes and Mr. Ernst asks if there is anything they can do to drop the price since he can afford the full cost. He states that if Mr. Ernst makes some improvements he might be able to drop the price a little. Mr. Griggs doesn't think Mr. E can get it done by five. Mr. E says he can, Mr. Griggs states he has to add more lights, some more sprinklers, a few fire extinguishers, and close the pool. Mr. E says he can't close the pool because their in the desert. Mr. Griggs says they only have one employee (Melody) with a lifesaving certificate and she isn't there at all times, if something happened the lawsuit would be terrifying. He has to pay the full insurance premium or close the pool. Mr. Griggs states that if all employees pass a lifesaving proficiently test he could possibly lower the price and keep the pool open. Mr. Ernst is confident they can do it.
At the pool, Brad asks Melody if she will have to go into the water. Melody states that swimming involves getting wet. Melody tells everyone to line up so she can assign partners. Kyle questions if they have to do mouth to mouth. Melody replies yes and Danny and Kyle fight over who gets Brad. Kyle tells Brad that this could save her life. Brad tells him to get a life and pushes him in the pool. Mr. Ernst and Mr. Griggs arrive. Mr. Ernst has a blow up crocodile. Kyle wants to switch partners with Danny, but he refuses. Mr. Ernst is partnered with Jake, Buddy with Kyle and Danny with Brad. Melody tells Mr. Ernst no flotation devices and confiscates the croc.
Kyle is practicing diving while watching the victim at the same time. Buddy tries his hand with the life preservers. He tries throwing it, but it flies behind him. His next try lands him and the preserver in the pool. Melody goes over the Brad who is doing CPR on Danny. Mr. Ernst is about to do CPR on Jake when Jake burps in his face. Melody asks what Jake had for lunch and he tells her tuna.
Mr. E pretends he drowning. Melody tells Jake who is reading and drinking a beverage that he has to save him. He asks Mr. E if he needs help. Melody tells Jake that when the victim is thrashing and saying he is drowning that it is obvious he needs help. Melody shoves Jake in the pool to rescue Mr. Ernst. Mr. E ends up dragging Jake back to shore after he pushes his head underwater. Danny and Brad are up, Danny goes into the water to be the victim and Brad has to rescue him. Melody gives Brad the life preserver ring to jump in with, but Brad says she can't do it and takes off.
The kids find Brad setting on a log. Brad tells them to leave. Mr. E comes and asks Brad if she is afraid of getting into the water because he recognizes the look. He is afraid of heights. He asks if she learned to swim. Brad tells him she did, she just had a bad experience when she was six. At a party her Uncle Winston accidentally dropped Brad into the pool and she went in head first for the first time and she panicked. She states she cried for three days. Brad tells him she knows how important the insurance is and if he makes her go into the pool she'll understand. He tells Brad he won't make her do anything because he would hate it if someone made him climb a tree. Mr. Griggs pulls Mr. Ernst aside and tells him if Brad doesn't pass the test the pool will be closed unless she is no longer an employee since only employees have to pass the test. Mr. Ernst could always fire her.
Jake is getting hot coals ready for Mondo Courage. Mr. E mistakes them for a weenie roast. Jake says their for Mondo Courage "because there is nothing like walking on a bed of hot coals". Mr. E says what would happen if Mr. Griggs saw this. Jake tells him he only said don't do anything a foot off the ground. Mr. E tells him to clean the stuff up right now. Mr. E has to make a decision about Brad. He can't fire her but he can't close the pool. Jake says he will cure Brad of her fear.
Phase one on Jake's curing process involves pouring a glass of water over your head. Phase two involves getting in the water trough. Brad is reluctant, but she gets in. The last part of phase two is setting down in the water through. Brad tells Jake she isn't afraid of water troughs. The others kids stick their heads over and say they are missing soap. Jake tries to throw some water at them.
At the pool, Brad has a bag on her head. Jake tells her it is to slowly reintroduce her to the water. Brad tells him that no one better see her like that. The others kids sneak up. Jake tells Brad that phase three involves the deep end. Mr. E arrives and asks why she is wearing a bag on her head. Mr. E trips on the life preserver and knocks Brad into the pool. Everyone jumps into save her, but Brad comes back up. Mr. E says she can take the test now. Brad replies that it is the second time that she almost drowned. Brad says he has to fire her and runs to pack her bags. Melody wonders if Brad is only afraid of pools. Mel states that Brad only has to prove she can rescue someone and what happens if someone needed rescuing. At the lake, Kyle is brushing a horse when Brad arrives with her bags. She asks if he is going to say goodbye. Kyle tells her he isn't good at goodbyes. They start walking lakeside. Kyle asks for a hug. Brad complies, but when he asks for a kiss Brad pushes him and he falls backwards into the lake. Kyle says weeds are tangled around his leg. Brad shouts for help, but no one comes. She says she knows it is them setting her up. Buddy, Danny, and Jake come out and state that the weeds wasn't part of the plan. Jake sends Buddy for Melody, but Brad jumps in the lake and pulls Kyle to shore. She gives Kyle mouth to mouth. Kyle tells her she couldn't resist. Mr. Griggs, who was watching from the dock with Mr. Ernst, tells him his new policy will be effective at 5pm. They go to sign the papers.
Jake is helping Uncle Ben with his fear of heights while the others cheer him on. He is climbing a wooden structure. Mr. E feels he is going to fall and die. Mr. E declares that he did it and we get a wide view of him about two feet off the ground standing on the windmill tower.