Since we are building both the mechanism and the control system for it, a proximity switch is certainly an option. But they add the complications of providing DC power to the units and adding relays to convert the open collector outputs to NC relay contacts. Never having used prox switches underwater, how is their range and repeatability affected by sensing a target through water, rather than air?

For stuff like this, I'm a big fan of the KISS principle. And it doesn't get much simpler than a pair of switch contacts interrupting power to the motor starter coil.