All items are lost if you die in water, making the main mechanic of this mod too risky to engage with

Just checked the code, this is responsible.

script.on_event(defines.events.on_post_entity_died, function(event)
for _, v in pairs(event.corpses) do
if ripple_at_position(v.position, v.surface) then
v.destroy()
end
end
end)

There should be a check for if it's a player corpse

script.on_event(defines.events.on_post_entity_died, function(event)
for _, v in pairs(event.corpses) do
if v.name ~= "character-corpse" and ripple_at_position(v.position, v.surface) then
v.destroy()
end
end
end)