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Insurance: Insured value vs Market value?


Monsoon merchant

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In the mongrel policy being discussed, the choice seems to be with the insurer.... or it could be interpreted that way, and you wouldn't know until you claimed, by which time it's too late sad.png

 

That's one way of looking at it. The other way to look at it is, you insure yourself against a loss. If at the end of the claim you have been put back in the position you were before the loss occurred then they policy has done it's job, however that result was arrived at.

 

I can see that there's potential for a number of arguments and possible disappointment with "market value", depending on how the claim is handled. Insurers though, contrary to popular belief, aren't out to stitch you up. It's just important to buy the right policy in the first place.

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That's one way of looking at it. The other way to look at it is, you insure yourself against a loss. If at the end of the claim you have been put back in the position you were before the loss occurred then they policy has done it's job, however that result was arrived at.

 

I can see that there's potential for a number of arguments and possible disappointment with "market value", depending on how the claim is handled. Insurers though, contrary to popular belief, aren't out to stitch you up. It's just important to buy the right policy in the first place.

I agree with the principle of your words but...

 

The point of the thread is that the OP pays on the basis of the cost/value of the boat when new. The broker won't allow this value to be reduced, thus reducing the annual cost, yet the policy might only provide a solution worth the replacement cost of the boat.

 

Given that the boat is older, and has almost certainly depreciated since new, the broker is collecting more money than may be reasonable, given the potential payout.

 

An insurer offering an " agreed value" policy knows that they may be providing a payout which is more than market value and, presumably, they charge handsomely for the privelidge.

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My glider is insured for an agreed value, in the event of a right-off I'd get the full amount. The premium is based on a % of the agreed value (plus more for third party insurance etc). It's probably worth what we paid for it 20 years ago, with inflation matching depreciation and anyway glider values tend to be affected by the Euro quite a bit since that is the largest market.

 

Cars are different of course. Although for something like a vintage car (hard to value) it would be an agreed value.

 

 

Boats I guess are somewhere in between.

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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?

 

With a car policy you can insure the depreication with a gap insurance for an extra cost , this ensures you get the full new replacement value of the car .. It maybe that the Collidge policy has gap insurance built in so read the policy . We are with Collidge and I am pretty sure thats what they told us but I will check later when home .

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My glider is insured for an agreed value, in the event of a right-off I'd get the full amount. The premium is based on a % of the agreed value (plus more for third party insurance etc). It's probably worth what we paid for it 20 years ago, with inflation matching depreciation and anyway glider values tend to be affected by the Euro quite a bit since that is the largest market.

Cars are different of course. Although for something like a vintage car (hard to value) it would be an agreed value.

Boats I guess are somewhere in between.

Although I suspect if your glider is written off, you may not get anything ;)

Rog

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When I had "finished" my sailaway, the insurers asked me to get a valuation from an appropriate person. I had a "to whom it may concern" letter from a broker who stated that in their opinion my boat had a marketable value of £x. I have subsequently reduced the value a bit as the value of the boat affects the premium and I know damn well they would not pay me the valuation value when it was new.

 

In my classic car-owning days, the owners' Club did an "agreed value" policy. This generally just required a few photos and a sensible value. It did cost a bit more, but meant that you could replace it with something similar after a write-off, rather than the token amount you would otherwise receive for a 30 year old car.

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Although I suspect if your glider is written off, you may not get anything ;)

Rog

No, you'd be surprised. Gliders have huge crumple zones, crash-resistant cockpits, no fuel to burn and it's rare to be killed in a crash unless you spin in or hit the ground inverted. Quite easy to write one off though. And that's just flying crashery. My single-seater is insured for £22k, a few years ago it was derigged in its trailer in the trailer park (which makes it quite a dense and smooth thing) when a huge gust picked the whole thing up and moved it about 10 yards so it was upside down caught in a wire fence halfway down a steep slope. That's Scottish mountain weather for you! The damage didn't seem too bad to me, just multiple punctures in the surfaces, but the insurance bill was around £15k, so not that far off a write-off. Yes, probably an inflated repair bill due to it being an insurance job but the loss adjuster said that all the repairers were like that.

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That's pretty much exactly what I thought reading the post.

 

Don't crash it Nick!

The thing with gliding is that it is a sport, not a means of transport. You can set your own level of risk of course so that for example if I were flying a member of the public it should be ultra-safe. But if I am flying in a competition safety margins may be minimal at times especially since we fly around the highlands of Scotland with lots of terrain.

 

In the same way one doesn't expect a coach driver to crash, but if Lewis Hamilton crashes no-one bats an eye.

 

But our club has been going for nearly 50 years, we've had 1 fatality and that was a chap who was not medically well, went up to 15,000' without oxygen, passed out and oversped his glider such that a wing came off. At the next club they had a fatal spin in about 10 years ago but nothing since, meanwhile two of their members have committed suicide. So gliding is pretty safe really (FLW!), it's life that is dangerous.

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We only had one pilot killed at out Gliding club.

 

It was a 'home-build' but had passed its airworthiness and achieved full certification (via a very experienced pilot / inspector - Brian Spreckley), however the comment was noted that being a V-tail it was very twitchy.

 

A few month later the owner spun-in from about 500/600 feet and didn't have time to recover.

 

I was 'Duty Instructor & was involved in a crash with a Motor-Falke at Sutton bank - wet wings and taking off over the edge of the ridge, unable to get flying speed but the ridge lift flipped it over on its back and it landed upside down half way down the ridge - both pilots walked away.

 

I had a very close call in a Skylark 3F, climbed into a 'nice Cu' that turned into a CuNim, & couldn't get out, couldn't lose height even with the 'barn-doors' open and was climbing at several 100 feet per minute with the noise pointing at the ground. Its the only time I've considered leaving the cockpit before arriving back on the ground, ended up 'spat out of the side of the cloud' inverted and at about 10,000 feet.

 

Those were the days !

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We only had one pilot killed at out Gliding club.

 

It was a 'home-build' but had passed its airworthiness and achieved full certification (via a very experienced pilot / inspector - Brian Spreckley), however the comment was noted that being a V-tail it was very twitchy.

 

A few month later the owner spun-in from about 500/600 feet and didn't have time to recover.

 

I was 'Duty Instructor & was involved in a crash with a Motor-Falke at Sutton bank - wet wings and taking off over the edge of the ridge, unable to get flying speed but the ridge lift flipped it over on its back and it landed upside down half way down the ridge - both pilots walked away.

 

I had a very close call in a Skylark 3F, climbed into a 'nice Cu' that turned into a CuNim, & couldn't get out, couldn't lose height even with the 'barn-doors' open and was climbing at several 100 feet per minute with the noise pointing at the ground. Its the only time I've considered leaving the cockpit before arriving back on the ground, ended up 'spat out of the side of the cloud' inverted and at about 10,000 feet.

 

Those were the days !

Surely you wouldn't consider abandoning it inside a CuNim! You'd end up a 'corpsicle'.

Bob

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Surely you wouldn't consider abandoning it inside a CuNim! You'd end up a 'corpsicle'.

Bob

 

That was my concern - I had recently read a story about early days of gliding on the Wasserkruppe (spelling) where 3 gliders entered a CuNim, two are thought to have collided and the pilots 'abandoned ship' one was found 'frozen' without having pulled his 'chute and it was believed (but how would they know) that he had waited until clearing the cloud before opening the chute, but with the wind & rain in his eyes never realised he had cleared cloud until he hit the ground, the 2nd one is thought to have pulled his chute and been carried up to 30,000 feet + and froze to death before lack of oxygen got him.

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Free fall for a while?

See Alan's post

 

That was my concern - I had recently read a story about early days of gliding on the Wasserkruppe (spelling) where 3 gliders entered a CuNim, two are thought to have collided and the pilots 'abandoned ship' one was found 'frozen' without having pulled his 'chute and it was believed (but how would they know) that he had waited until clearing the cloud before opening the chute, but with the wind & rain in his eyes never realised he had cleared cloud until he hit the ground, the 2nd one is thought to have pulled his chute and been carried up to 30,000 feet + and froze to death before lack of oxygen got him.

Yes, I know this story, as do a lot of glider pilots, it's where my concerns came from.

Bob

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I have now had a reply from the insurers, which seems very woolly in insurance terms, where things generally seem to be so tightly specified.

 

It does indeed seem that the insurers can decide to invoke the replacement clause at their will, with no specific criteria, and thus having over-collected premiums over the years. They mention the idea of betterment as someone talked about earlier.

 

They say that as long as the insured value is broadly similar to the market value, they will pay out no problem, but if there is a discrepancy, they may insist on a replacement. Surely this makes the idea that this policy is based on an agreed sum somewhat meaningless? They would replace with "an equivalent boat" though they do not specify how that would be determined, and neither does the policy.

 

Contrary to what they told me earlier, they are now saying that the value should be reviewed and amended annually, to avoid this situation happening, but that would be ridiculous if they were insisting on a surveyor's valuation each year, as this would far outweigh the policy saving. I will write back to them on this.

 

The letter ends with the statement that they will always try to ensure a fair settlement to any claim. Again a rather woolly statement that hardly fills with confidence.

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I suppose the point is that you could pick up a plastic cruiser for a couple of grand, insure it for £100k and then mysteriously have it burn out or sink in deep water, then come knocking for your £98k profit.

 

So I imagine the value has to be reasonable, but not precise since of course the value of a boat is only what someone is prepared to pay for it.

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Of course another can of worms with a marine insurance is "contributory factors" ( oh dear Sir, you haven't maintained your boat correctly, that's why it sank. You couldn't have maintained your rudder correctly as even if you did have a mattress wrapped round your propeller, you should have been able to steer to the bank. You would only have gone over the weir if you had been proceeding at a reckless speed ....etc.....etc.)

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So I imagine the value has to be reasonable, but not precise since of course the value of a boat is only what someone is prepared to pay for it.

What is "reasonable"? Very wooly!

 

Say you buy a brand new boat for £80k and, 3 years later, you can replace it with a similar boat for £60k, is the £20k difference reasonable, or is betterment by a third unreasonable?

 

I'd be putting the mortgage on the insurance company asserting the latter.

 

The whole think now smacks of a broker trying to continue to rip off a customer.

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I have now had a reply from the insurers, which seems very woolly in insurance terms, where things generally seem to be so tightly specified.

 

It does indeed seem that the insurers can decide to invoke the replacement clause at their will, with no specific criteria, and thus having over-collected premiums over the years. They mention the idea of betterment as someone talked about earlier.

 

They say that as long as the insured value is broadly similar to the market value, they will pay out no problem, but if there is a discrepancy, they may insist on a replacement. Surely this makes the idea that this policy is based on an agreed sum somewhat meaningless? They would replace with "an equivalent boat" though they do not specify how that would be determined, and neither does the policy.

 

Contrary to what they told me earlier, they are now saying that the value should be reviewed and amended annually, to avoid this situation happening, but that would be ridiculous if they were insisting on a surveyor's valuation each year, as this would far outweigh the policy saving. I will write back to them on this.

 

The letter ends with the statement that they will always try to ensure a fair settlement to any claim. Again a rather woolly statement that hardly fills with confidence.

 

That was me in post 7.

 

The reply is as rather expected I would say given the wording quoted earlier and shows the value of checking things with insurance companies and getting stuff in writing if possible from them. Better to know where you stand now rather than find out at claim time when you may feel under pressure just to accept what they say the policy wording 'actually' meant in reality at that time.

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