Insurance: Insured value vs Market value?

[Monsoon merchant]

Hi. We insured our narrowboat for a sum when we bought it new, coming up to 4 years ago. As the premium is based on the insured value, I thought it might now be time to reduce the cover, as the boat will undoubtedly have depreciated considerably (even though it was bought as a sailaway).

 

However, the brokers (Collidge) seem to be saying that if I carry on insuring for this original sum, then that is what they would pay out in the event of a total loss - which would be great, and worth the extra premium. Does this sound right though? I am aware that with motor insurance, the insured value is ignored in the event of a claim, and their version of a market value applied.

 

Any ideas?

[Jim Riley]

Get them to put it in writing? What does the schedule say.

[peterboat]

i am sure i pay the valued sum for ten years which is what they pay in the event of a total loss

[Guest]

Hi. We insured our narrowboat for a sum when we bought it new, coming up to 4 years ago. As the premium is based on the insured value, I thought it might now be time to reduce the cover, as the boat will undoubtedly have depreciated considerably (even though it was bought as a sailaway).

 

However, the brokers (Collidge) seem to be saying that if I carry on insuring for this original sum, then that is what they would pay out in the event of a total loss - which would be great, and worth the extra premium. Does this sound right though? I am aware that with motor insurance, the insured value is ignored in the event of a claim, and their version of a market value applied.

 

Any ideas?

 

Normally insurance policies will only pay out what they believe the market value of the insured item is (up to the max. of what you have declared) even if the value you have declared is more than that. I would definitely want something in writing from them either in the form of a letter/email or by checking what the policy/schedule actually says.

[Sabcat]

You need to look at the policy wording, without that all you've got is guess work.

[bigste]

Don't always believe what they say. Lets say you insure it for 50k. after say 8 years it catches fire and it's a total loss. market value after 8 years will be about 30k. If they were to pay out 50k everybody would be burning their own boat. They will not pay more than it's worth.

[Guest]

Don't always believe what they say. Lets say you insure it for 50k. after say 8 years it catches fire and it's a total loss. market value after 8 years will be about 30k. If they were to pay out 50k everybody would be burning their own boat. They will not pay more than it's worth.

 

That is about the rub of it. (Most policies have clauses in about 'betterment' - ie basically meaning they put you back to where they believe you were prior to the insured event, but not making you 'better off' than you were before it) ed - that is unless they specifically have cover that allows for 'new for old' in which case the policy wording will be very clear.

 

eg Our caravan insurance does for the first five years from new BUT the wording is very clear in the policy.

Edited January 7, 2016 by MJG

[Monsoon merchant]

I have managed to dig out the original policy. It states "in the event of a total loss, we will pay either the agreed value of your vessel, or provide a replacement vessel of a similar age, size and type".

 

'Agreed value' is defined as "the amount shown in the policy documentation which represents the value of your vessel as declared by you and agreed by us".

 

In this case the agreed value is the original new value, given nearly 4 years ago. And they have no wish to change it - in fact they have said if I want to reduce it, I need a surveyor's valuation!

 

There seems to be a huge discrepancy between the two choices they have if they have to settle a total loss. On one hand they might have to pay out say £80k cash, on the other they could buy you a boat for £40k? If the premium is based on a value of £80k this could be seen as a bit of a con.

[valrene9600]

 

Normally insurance policies will only pay out what they believe the market value of the insured item is (up to the max. of what you have declared) even if the value you have declared is more than that. I would definitely want something in writing from them either in the form of a letter/email or by checking what the policy/schedule actually says.

Exactly what i was told.

[Guest]

I have managed to dig out the original policy. It states "in the event of a total loss, we will pay either the agreed value of your vessel, or provide a replacement vessel of a similar age, size and type".

 

'Agreed value' is defined as "the amount shown in the policy documentation which represents the value of your vessel as declared by you and agreed by us".

 

In this case the agreed value is the original new value, given nearly 4 years ago. And they have no wish to change it - in fact they have said if I want to reduce it, I need a surveyor's valuation!

 

There seems to be a huge discrepancy between the two choices they have if they have to settle a total loss. On one hand they might have to pay out say £80k cash, on the other they could buy you a boat for £40k? If the premium is based on a value of £80k this could be seen as a bit of a con.

 

The key words are 'either' and 'or' so as I read that they could indeed provide you with a replacement boat worth a lot less than the amount you have insured. As for it being a 'con' - well this is insurance we are talking about so whilst I wouldn't go that far (as to me the wording is clear) but it's certainly not untypical of the sector I would say.

[Sabcat]

I have managed to dig out the original policy. It states "in the event of a total loss, we will pay either the agreed value of your vessel, or provide a replacement vessel of a similar age, size and type".

 

'Agreed value' is defined as "the amount shown in the policy documentation which represents the value of your vessel as declared by you and agreed by us".

 

In this case the agreed value is the original new value, given nearly 4 years ago. And they have no wish to change it - in fact they have said if I want to reduce it, I need a surveyor's valuation!

 

There seems to be a huge discrepancy between the two choices they have if they have to settle a total loss. On one hand they might have to pay out say £80k cash, on the other they could buy you a boat for £40k? If the premium is based on a value of £80k this could be seen as a bit of a con.

 

If it's an agreed value policy then that is what you will be paid. I have the same kind of policy with an agreed value (based on a surveyors report) valid for 10 years.

[Guest]

 

If it's an agreed value policy then that is what you will be paid. I have the same kind of policy with an agreed value (based on a surveyors report) valid for 10 years.

 

Sorry but I still read the wording as they have the options should they choose to provide a replacement boat of 'equivalent value' of the total loss.

 

(Call me Mister cynical if you wish)

[mayalld]

Hi. We insured our narrowboat for a sum when we bought it new, coming up to 4 years ago. As the premium is based on the insured value, I thought it might now be time to reduce the cover, as the boat will undoubtedly have depreciated considerably (even though it was bought as a sailaway).

 

However, the brokers (Collidge) seem to be saying that if I carry on insuring for this original sum, then that is what they would pay out in the event of a total loss - which would be great, and worth the extra premium. Does this sound right though? I am aware that with motor insurance, the insured value is ignored in the event of a claim, and their version of a market value applied.

 

Any ideas?

 

It is certainly usual for N&G to write policies on an agreed value basis.

[Tuscan]

I have managed to dig out the original policy. It states "in the event of a total loss, we will pay either the agreed value of your vessel, or provide a replacement vessel of a similar age, size and type".

'Agreed value' is defined as "the amount shown in the policy documentation which represents the value of your vessel as declared by you and agreed by us".

In this case the agreed value is the original new value, given nearly 4 years ago. And they have no wish to change it - in fact they have said if I want to reduce it, I need a surveyor's valuation!

There seems to be a huge discrepancy between the two choices they have if they have to settle a total loss. On one hand they might have to pay out say £80k cash, on the other they could buy you a boat for £40k? If the premium is based on a value of £80k this could be seen as a bit of a con.

I have a similar agreed value policy based on an original surveyors valuation. I looked at getting a quote at a much lower value but was also told I needed a new valuation which would cost more than the reduction in premium.

[TheBiscuits]

It is possible they use value bands for boats - 25k, 50k, 100k etc.

 

It's probably worth mentioning that 100k isn't a lot when you are talking marine insurance!

[peterboat]

i have just renewed my insurance with craft insure, i am covered for 140k which is the new replacement cost of my boat, their is no mention of market value etc so i would assume that i should be ok. however we all know what assumption is

[Southern Star]

I have a similar agreed value policy based on an original surveyors valuation. I looked at getting a quote at a much lower value but was also told I needed a new valuation which would cost more than the reduction in premium.

I imagine you could get a valuation for free by asking a broker how much he would market it at were you to put it on sale with him, and getting him to email you the valuation.

[Tuscan]

I imagine you could get a valuation for free by asking a broker how much he would market it at were you to put it on sale with him, and getting him to email you the valuation.

Yes I could for my benefit, but not for the insurers who need a survey and valuation report

[Southern Star]

Yes I could for my benefit, but not for the insurers who need a survey and valuation report

Have they specifically said that it needs to be a surveyor's valuation? If my truck was a total loss, the insurers would accept a valuation from the main dealer which maintains it.

[David Mack]

Have they specifically said that it needs to be a surveyor's valuation? If my truck was a total loss, the insurers would accept a valuation from the main dealer which maintains it.

 

But trucks are, on the whole, a mass produced factory product. There must be a Glasses Guide type price for trucks, which your main dealer could use as well as anyone else, whereas boat values are much more variable.

[Alan de Enfield]

My boat insurance is a 'fixed value' policy :

 

The Agreed Value Policy
The Agreed value Policy is a traditional indemnity based contract. Insurers will therefore place you in the same position as prior to loss. The contract is based on the price paid for the vessel or a surveyor’s valuation, which becomes the agreed value in the policy.

This type of policy has the benefit that insurers will pay out on this amount and will NOT make deductions for depreciation, inflation or currency fluctuation except, in some cases specified in the policy such as wear and tear on machinery and masts, spars and rigging, outboard engines where a deduction will/can be made. This type of policy suits clients who wish to know EXACTLY what they will be paid out prior to loss. The only drawback is that is can be more expensive than other types of cover.

 

The insurance broker offers you (me) a choice you can have either :

1) Agreed value policy or

2) Market value policy.

 

With the 'agreed value policy' the value of the vessel remains at that valuation given at the inception of the policy - so - even (for example) 10 years later the boat is still insured for the same amount. (except for a small adjustment for value on engines based on the 'hours' - fair enough)

Once the policy is issued then that is the accepted value.

 

Is this not 'standard' ?

Edited January 7, 2016 by Alan de Enfield

[Southern Star]

There must be a Glasses Guide type price for trucks, which your main dealer could use as well as anyone else, whereas boat values are much more variable.

Just on this point, there is no published price guide for used truck values, since they too can be massively variable depending largely on the use to which it has been put thus far. If I was looking to buy another truck and had the choice of two identical three-year-old trucks, one which had done 500,000km hauling cornflakes along the motorway or one which had done 200,000km hauling concrete around a city, I would pay far more for the first one than the second.

 

It might be worth asking the insurance company what type of valuation they are looking for?

[Richard10002]

 

If it's an agreed value policy then that is what you will be paid. I have the same kind of policy with an agreed value (based on a surveyors report) valid for 10 years.

 

An agreed value policy is exactly that... they pay the agreed value in the event of total loss. However, if it is an agreed value policy with options and conditions, then they are free to charge you for the agreed value cover, but wriggle out using the options and conditions... which you are aware of.

 

I have the opposite problem. I paid £18k for my boat, but the surveyor valued it at £26k. New insurers insist on seeing the surveyors report before agreeing to cover at £26k.

Edited January 7, 2016 by Richard10002

[MartinC]

I have managed to dig out the original policy. It states "in the event of a total loss, we will pay either the agreed value of your vessel, or provide a replacement vessel of a similar age, size and type".

 

'Agreed value' is defined as "the amount shown in the policy documentation which represents the value of your vessel as declared by you and agreed by us".

 

In this case the agreed value is the original new value, given nearly 4 years ago. And they have no wish to change it - in fact they have said if I want to reduce it, I need a surveyor's valuation!

 

There seems to be a huge discrepancy between the two choices they have if they have to settle a total loss. On one hand they might have to pay out say £80k cash, on the other they could buy you a boat for £40k? If the premium is based on a value of £80k this could be seen as a bit of a con.

 

Normaly marine policies are on an agreed value basis although some marine underwriters have moved away from the industry standard to offer market value. I must confess that this is the first time that I have seen a "mongrel" policy providing both at the option of the underwriter. "Replacement vessel of a similar age, size and type", endless room for arguement, not an option that I would wish to see on my policy.

[Alan de Enfield]

 

Normaly marine policies are on an agreed value basis although some marine underwriters have moved away from the industry standard to offer market value. I must confess that this is the first time that I have seen a "mongrel" policy providing both at the option of the underwriter. "Replacement vessel of a similar age, size and type", endless room for arguement, not an option that I would wish to see on my policy.

 

From the TV ads, that is similar to what Direct Line are offering their policy holders, but the choice is down to the policy holder - replacement or cash