A part-time rescue team, covering 30 miles of Pembrokeshire coast, will not respond to many emergencies from next week in a row over insurance.
Brian MacFarlane is partially disabled following the accident
The Fishguard team, who are only paid when called out, are in dispute with the Maritime and Coastguard Agency over a colleague's injury compensation.
Brian MacFarlane lost his full-time job after damaging his knee in a rescue.
The team is unhappy about injury cover, but the MCA said each case was fully assessed on an individual basis.
The 12-strong Fishguard team, which covers an area from Porthgain to the beach at Newport, support full-time coastguards and volunteer life-boat crews in emergencies such as locating and rescuing missing people.
It is one of about 400 around the UK and although members have a variety of full-time day jobs they are on-call around-the-clock, every day of the year.
Four years ago Brian MacFarlane of the Fishguard team was injured while rescuing an animal from a cliff face.
The 38-year-old father subsequently lost his main job as a residential social worker, working with young people, and was now classed "25% permanently disabled".
He was recently told he did not qualify for permanent injury benefit but would get temporary payments.
"Financial strain is probably one of the biggest strains that any family can face," he said.
"I've got a young daughter and a wife that works hard - you gear your existence to the two incomes."
Team member Anthony Rogers said the rest of his colleagues were worried that they would lose out financially if they were also injured.
"We see ourselves as volunteers along the lines of lifeboat crews - we all have full-time jobs and don't do it for the money but to provide a valuable service," he said.
There are about 400 MCA search and rescue teams covering the UK
"We have said we will not carry out duties involving risk of personal injury until we are satisfied that our families will not suffer unnecessarily in the event of an injury.
"It is not a decision we have gone into lightly and the reason we have given the MCA 10 days notice is we hope to resolve this before then."
In a statement, the MCA said it could not release information about individual employees but said the service provided by rescue officers was "valued highly".
It added rescue officers were covered under the Civil Service Injury Benefits Scheme.
"Under this scheme all cases are assessed on an individual basis by the Government medical officers," it said.
The MCA added Mr MacFarlane was currently receiving payments under the scheme.