Insurance value?

[Cheese]

What should a boat be insured for?

 

With a house, the buildings insurance should for the rebuilding cost (including demolition / site clearance after say a fire). This can be much lower than the market value, because the latter will include the land value.

 

With a boat, should it be for a new build cost, including fit-out, or for the current market value? The former might be rather greater than the latter.

[frangar]

I had a look at various boat sale sites then plucked a figure out of the air that I thought I could replace my boat for as like for like as I could get. I was able to up the value on the insurers website and pay a little extra in premium….it’s not an exact science like a modern car…I have the same issues with my classic cars….the value is what someone will pay which can vary day to day.

[blackrose]

13 minutes ago, Cheese said:

 

With a boat, should it be for a new build cost, including fit-out, or for the current market value? The former might be rather greater than the latter.

 

Isn't it just current market value? I'd have thought there's not much point insuring for more than that if one's insurer isn't prepared to pay out more than market value. 

 

In practice of course, a total wright off is unlikely as there would uselessly be some salvage value, even after a fire or sinking. 

Edited June 4, 2022 by blackrose

[frangar]

1 minute ago, blackrose said:

 

Isn't it just current market value? I'd have thought there's not much point insuring for more than that if one's insurer isn't prepared to pay out more than market value. 

 

In practice of course, a total wright off is unlikely as there would uselessly be some salvage value, even after a fire or sinking. 

The trouble is market value is very variable…no two boats are really alike…especially older boats. I’m always amazed by boats on brokerage at my marina…some that I think are vastly overpriced sell immediately and others seem cheap in comparison but hang around….often those boats are the ones with some character to my mind…eg proper engines…back cabins…nice hull lines…but the modern market seems to want a square box and painted internal stuff….

[blackrose]

9 minutes ago, frangar said:

The trouble is market value is very variable…no two boats are really alike…especially older boats. 

 

Yes, but you could say the same thing about new build cost. And as I said, most insurers are only going to pay market value. 

Edited June 4, 2022 by blackrose

[cuthound]

I recently upped the value of my boat (for the second year running).

 

In my discussions with the insurer they made it clear they will only pay out either the insured value or the market value depending on which is lower, assuming the insured value is equal to or higher than the market value.

 

They also said if it the boat is significantly undervalued they will only pay out the percentage of market value that the boat was insured for.

 

If I had wanted to increase the insured  value by more than 10% then I would have to pay for a valuation survey.

Edited June 4, 2022 by cuthound
To add a missing worm

[frangar]

Just now, blackrose said:

 

Yes, but you could say the same thing about new build cost. 

Indeed….but at least you can say what you paid…I’ve owned my boat for 30 years…but I couldn’t get a replacement if I insured it now for what I paid for it then. 

[dmr]

Marine insurnce has the concept of "betterment", the repair or replacement can be no more valuable than what you started with, so most policies are market value. A very few are "agreed value" but these will likely have a clause stating that the agreed value must not be obviously more than the actual value. Agreed value is good if you have a boat that you think is worth more than what it might be valued at after a total loss such as fire where the valuer would not be able to assess its true value. I believe (hope) that my boat is worth much more than a "typical 20 year old Colecraf"t so pay more for agreed value.

[blackrose]

Just now, cuthound said:

I recently upped the value of my boat (for the second year running).

 

 

Yes that's a good point. One call always change the insured value if the market value increases. It's not a fixed figure. 

[frangar]

2 minutes ago, dmr said:

Marine insurnce has the concept of "betterment", the repair or replacement can be no more valuable than what you started with, so most policies are market value. A very few are "agreed value" but these will likely have a clause stating that the agreed value must not be obviously more than the actual value. Agreed value is good if you have a boat that you think is worth more than what it might be valued at after a total loss such as fire where the valuer would not be able to assess its true value. I believe (hope) that my boat is worth much more than a "typical 20 year old Colecraf"t so pay more for agreed value.

I have my boat on agreed value as I do my classic cars…as you say you pay a little more but hopefully it lessens the argument with the insurance company…although who knows…

[blackrose]

1 minute ago, frangar said:

Indeed….but at least you can say what you paid…I’ve owned my boat for 30 years…but I couldn’t get a replacement if I insured it now for what I paid for it then. 

 

But could you get your insurer to pay the new build cost (or anything above market value) in the case of a total loss? If not then there's no point insuring for more than that. That's all I'm really saying. They'll probably take the increased premium from you every year, but will they really pay out more than market value?

[David Mack]

1 hour ago, cuthound said:

They also said if it the boat is significantly undervalued they will only pay out the percentage of market value that the boat was insured for.

I have been told that in the absence of a valuation, the insurer will only insure for the price you paid for the boat (presumably to stop fraudulent claims for a higher value). So where does that leave you if the price paid is significantly less than current market value?

[frangar]

12 minutes ago, David Mack said:

I have been told that in the absence of a valuation, the insurer will only insure for the price you paid for the boat (presumably to stop fraudulent claims for a higher value). So where does that leave you if the price paid is significantly less than current market value?

But a valuation from a couple of years ago…or even last year is probably going to be less than the current value this year given how prices have risen.
 

In my experience of having a (modern) car stolen and suffering a house burglary with supposed “new for old” cover you end up having a protracted battle of wills with the insurance co….in the end in both cases I got what I felt was right but it took effort and determination…basically they will try everything not to pay out and to fob you off…however they did give in at the end but it took about 3 months including the threat to come and sit in their HQ until it was sorted. 

 

Hopefully going for agreed value and paying the proportionally higher premium might make things easier but of course you are never sure till you claim…

[cuthound]

1 hour ago, David Mack said:

I have been told that in the absence of a valuation, the insurer will only insure for the price you paid for the boat (presumably to stop fraudulent claims for a higher value). So where does that leave you if the price paid is significantly less than current market value?

 

I asked my insurer that specific question and was told they would accept and pay out a 10% increase on last year's insured sum. If a larger increase was required then I needed to submit the results of a valuation survey.

[MtB]

1 hour ago, David Mack said:

I have been told that in the absence of a valuation, the insurer will only insure for the price you paid for the boat (presumably to stop fraudulent claims for a higher value). So where does that leave you if the price paid is significantly less than current market value?

 

 

I too have been told the same. They will pay out the lowest of these three figures:

 

What you paid for it

Market value

Insured value

 

I've also had it explained to me that one of the principles of insurance is that the insured must never be permitted to make a profit out of an insurance claim, or something along those lines. If I understood correctly that is. 

[Quattrodave]

I don't doubt you, but that doesn't seem fair... what if I'd purchased a doer-upper spent a number of years completely refitting, surely the boat would be worth vastly more that the original price... or have I mis-understood?

[frangar]

1 minute ago, Quattrodave said:

I don't doubt you, but that doesn't seem fair... what if I'd purchased a doer-upper spent a number of years completely refitting, surely the boat would be worth vastly more that the original price... or have I mis-understood?

I think its best to talk to the insurance co concerned as they all seem to have different interpretations…and if possible get that in writing….I have had some issues with my classic car insurance and will be looking elsewhere this year as if they are problematic before a claim I hate to think what might happen if I claim…

[MtB]

5 minutes ago, Quattrodave said:

I don't doubt you, but that doesn't seem fair...

 

Insurance often isn't.

 

Backmin about 1985 I bought a Mini Cooper "S" for £650. It promptly got stolen and wrapped around a tree and my insurance point blank refused to pay out more than the (unrealistically low) book price of £350 for it, despite there being no other cars the same on the market for less than about a grand by then. Their position was it was not their fault if I'd over-paid when I bought it three months previously. 

[Momac]

12 hours ago, Cheese said:

What should a boat be insured for?

Usually the price you paid for it.

 

[Momac]

9 hours ago, MtB said:

I've also had it explained to me that one of the principles of insurance is that the insured must never be permitted to make a profit out of an insurance claim

That principle is correct

In an ideal world you should be returned to the position you were in prior to the loss .

 

[MtB]

3 minutes ago, MartynG said:

That principle is correct

In an ideal world you should be returned to the position you were in prior to the loss .

 

 

Most insurance payouts ensure you are in a worse position than you were in prior to the incident leading to your claim, in my personal experience. 

 

 

Hence my cynicism about insurance and my preference for self-insurance whenever possible, or the cheapest possible TPI when insurance is mandatory.

 

 

[Alan de Enfield]

13 minutes ago, MtB said:

Hence my cynicism about insurance and my preference for self-insurance whenever possible, or the cheapest possible TPI when insurance is mandatory.

 

 

You don't actually need to insure your vehicle for use on the roads if ....................

 

Source :

Road Traffic Act 1988

Section 144

Exceptions from requirement of third-party insurance or security

(1)Section 143 of this Act does not apply to a vehicle owned by a person who has deposited and keeps deposited with the Accountant General of the Supreme Court the sum of £15,000, at a time when the vehicle is being driven under the owner’s control.

 

[Slow and Steady]

10 minutes ago, MtB said:

 

Most insurance payouts ensure you are in a worse position than you were in prior to the incident leading to your claim, in my personal experience. 

 

 

Hence my cynicism about insurance and my preference for self-insurance whenever possible, or the cheapest possible TPI when insurance is mandatory.

 

 

We had a severe mains pressure burst pipe in the loft when we were away from home. By the time we got back 2/3 of the house was wrecked, ceilings down, plaster falling off walls (it was an 1850's double fronted house). We got that 2/3 of the house renovated for nothing and a new kitchen. The deal was that I got 3 quotes which I did. The insurance company then tried to foster some cheapo company on me but I resisted successfully to use a company that I'd been recommended by friends. The company that did the job openly told me they'd over-priced and "did I want anything extra doing?". I got all the downstairs floors  floor sanded and varnished, Skirtings and doors stripped and varnished and an extra window installed in the bathroom c/w nice appropriate brickwork. I think we did pretty well out of it.

 

Counter that on agreed value car insurance it was explained to me that the agreed price was the MAX they would pay out rather than a guaranteed sum. Tricky Dickies eh?

[Momac]

17 minutes ago, MtB said:

 

Most insurance payouts ensure you are in a worse position than you were in prior to the incident leading to your claim, in my personal experience. 

 

 

 

Yes 

 I did say ' ideal world ' .  But that world  does not exist.

 

[gatekrash]

And even if you have a claim, and they pay out what you expect or more (we had a flood in the kitchen and they did a good job replacing everything) then you'll be paying vastly inflated premiums for the next 5 years as you have to declare that previous claim, so you still end up paying for it.

 

Only one winner in an insurance claim, unless there's a solicitor involved in which case there are 2 winners, and neither of them will be you...