Listing price vs insurance value?

[FBoykin]

Looking at a used trawler for sale in Florida. Owner forwarded some of the boat's recent paperwork. His current insurance shows boat is insured for 250k; he's asking 350k for the boat. 100k spread seems a bit wide to me. Am I overlooking something? Thanks!

 

[Capt.Bill11]

Looking at a used trawler for sale in Florida. Owner forwarded some of the boat's recent paperwork. His current insurance shows boat is insured for 250k; he's asking 350k for the boat. 100k spread seems a bit wide to me. Am I overlooking something? Thanks!

You are missing the fact that the owner can pick a figure lower than market value to insure the boat for.

 

[BandB]

Looking at a used trawler for sale in Florida. Owner forwarded some of the boat's recent paperwork. His current insurance shows boat is insured for 250k; he's asking 350k for the boat. 100k spread seems a bit wide to me. Am I overlooking something? Thanks!

Insured value has no relevance to value of a boat and even less to asking price of a boat. Not knowing more about the boat, I couldn't speak about the differing values.

 

[gaston]

Looking at a used trawler for sale in Florida. Owner forwarded some of the boat's recent paperwork. His current insurance shows boat is insured for 250k; he's asking 350k for the boat. 100k spread seems a bit wide to me. Am I overlooking something? Thanks!

Easy he wants $100000 more than its worth .Or you pay $350000 it burns to the water line then the insurance company will give you $150000 as thats what they think it was worth

My "agreed value" on my boat was by providing the insurance company a independent valuation which just happened to be 20% more than I payed but that was out of my hands as the insurance company provided a list of valuers for us to pick from may be different over there

 

[yachtbrokerguy]

The only time that insured value and actual value have to be close is for a recent purchase. Insurance companies want a recent survey or a valuation report from a marine surveyor to issue a new policy.

 

[Carolena]

We could have insured our boat for substantially more than we paid given the valuation survey (and we got a very good deal), but decided to just insure for what we have into it. In other words, insurance value and purchase price will not necessarily have any direct correlation. If we sold our boat today, I have no doubt that it would go for more than what we have it insured for - we basically decided to self-insure the difference if we had to replace it.

 

[HeadMistress]

The more of the risk you assume yourself, the lower your premiums will be. Total loss is the LEAST likely scenario...most claims are for damage. So unless you're accident prone, keep your coverage (except for liability) as low and your deductables as high as your risk tolerance--and/or your lender--will let you

 

[dhays]

The more of the risk you assume yourself, the lower your premiums will be. Total loss is the LEAST likely scenario...most claims are for damage. So unless you're accident prone, keep your coverage (except for liability) as low and your deductables as high as your risk tolerance--and/or your lender--will let you

+1

 

[FBoykin]

Thanks for the comments. Thinking back on my question, and reading the responses so far, I see I really didn't think things through to begin with!

 

[psneeld]

I dropped the insured price a bit....didn't matter as the price was low enough at purchase and the savings of lower hull price do add up.

Haven't had an insurance claim in 40+ years...why worry now when I could replace in cash and liability, salvage and environmental are good.

 

[BandB]

I dropped the insured price a bit....didn't matter as the price was low enough at purchase and the savings of lower hull price do add up.

Haven't had an insurance claim in 40+ years...why worry now when I could replace in cash and liability, salvage and environmental are good.

There is one other potential issue. With some policies, when an item is insured for less than a certain percentage of it's true value, then partial claims may be prorated as well. Again, if you are prepared to absorb it, no problem. An example would be a $500k boat insured for $300k. The boat has damage of $50k. Insurer only pays $30k less deductible. Pau Hana may jump in with how common this is on marine policies.

 

[BruceK]

There is one other potential issue. With some policies, when an item is insured for less than a certain percentage of it's true value, then partial claims may be prorated as well. Again, if you are prepared to absorb it, no problem. An example would be a $500k boat insured for $300k. The boat has damage of $50k. Insurer only pays $30k less deductible. Pau Hana may jump in with how common this is on marine policies.

That process is called "averaging" here. Insure 3/5ths of the boat, get 3/5ths of the claim. I bet there is no corresponding top up if you overinsure. Except "agreed value" total loss cover.

 

[BandB]

Here is the principle:

International Risk Management Institute definition of coinsurance is:

"A property insurance provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not at least equal to a specified percentage (commonly 80 percent) of the value of the insured property. The coinsurance provision specifies that the insured will recover no more than the following: the amount of the loss multiplied by the ratio of the amount of insurance purchased (the limit of insurance) to the amount of insurance required (the value of the property on the date of loss multiplied by the coinsurance percentage), less the deductible."

If a Coinsurance percentage is shown in the Declarations, the following condition applies

a. We will not pay the full amount of any "loss" if the value of Covered Property at the time of "loss" times the Coinsurance percentage shown for it in the Declarations is greater than the Limit of Insurance for the property. Instead, we will determine the most we will pay using the following steps:

(1) Multiply the value of Covered Property at the time of "loss" by the Coinsurance percentage;

(2) Divide the Limit of Insurance of the property by the figure determined in step (1);

(3) Multiply to the total amount of "loss", before the application of any deductible, by the figure determined in step (2); and

(4) Subtract the deductible from the figure determined in step (3)

We will pay the amount determined in step (4) or the Limit of Insurance, whichever is less. For the remainder, you will either have to rely on other insurance or absorb the "loss" yourself​

Actually, this issue has often come about by agents trying to reach price points to get the insured's business.

 

[rjwilliams11741]

Easy he wants $100000 more than its worth .Or you pay $350000 it burns to the water line then the insurance company will give you $150000 as thats what they think it was worth

My "agreed value" on my boat was by providing the insurance company a independent valuation which just happened to be 20% more than I payed but that was out of my hands as the insurance company provided a list of valuers for us to pick from may be different over there

What the boat is worth and what you insure it for are two different things. The insurance company probably won't do an agreed value for more than a surveyor says it's worth but will certainly insure it for less. The amount of insurance has to insure what is owed on the boat if it is financed so a lot of folks insure that amount and "self insure" the rest.