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Old 04-22-2021, 10:59 AM   #1
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Replacement cost or as insured cost.

We just had a boat burn and sink in our marina, I'm guessing a total loss. Will the owner get replacement value or the insured value? With the cost of boats what they are today, the replacement value would have to be much higher than the insured value, or am I wrong?
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Old 04-22-2021, 11:34 AM   #2
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Replacement value would indeed be more if assuming a new build. As to whether the insured gets replacement value, or insured value, that is entirely up to what his/her policy states.


Policies are general ACV (actual cash value), or Agreed Value. ACV means the insurance company tries to tell you your $100k boat is really only worth $40k, and you will have to convince them that it is worth more. Agreed value, if agreed at $100k, means you get $100k, plus sales tax, minus deductible. Agreed value policies are generally more expensive, but not always. Hope this helps!
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Old 04-22-2021, 12:12 PM   #3
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I doubt the replacement cost. A pre-purchase survey was done on our (at the time) Krogen 42 last month. I think there would be lots of insurance scams if you could insure for the replacement cost.

This is from the survey's report:

Therefore, after consideration of the reliability of the data, the extent of the necessary adjustments and condition of the vessel, it is your surveyor's opinion that the ''FAIR MARKET VALUE'' of the subject vessel is: $175,000 Dollars

The ''ESTIMATED REPLACEMENT COST'' indicates the retail cost of a new vessel of the same make/model with similar equipment offered by the same manufacturer. ''ESTIMATED REPLACEMENT COST'' of the subject
vessel is: $2,085,000 Dollars
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Old 04-22-2021, 01:05 PM   #4
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There's more to boat insurance than just the bare boat...bed and bath linens, all the owner added electronics and appliances, personal property kept aboard, etc. and how the insurance company them. Does the policy provide replacement cost regardless of age or do the depreciate all of it. A friend who owned a 60' houseboat was always bragging that he had the "best insurance deal on the planet"...until a hose parted company with an open below-waterline thru-hull when no one was aboard and his 6 yr old boat sank in its slip. That was when he learned that his insurance only covered raising the boat and drying out the engines and generator...everything ON the boat including furniture, all appliances, bedding, even wall covering, was fully depreciated after 5 years. He never bragged about his "great insurance deal" after that.

Most real yacht insurance companies offer full replacement coverage for contents and personal items, usually for a pretty reasonable cost with a separate deductible from the agree hull value deductible. So when comparing insurance quotes, it's always a good idea to read ALL the fine print.

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Old 04-23-2021, 01:55 PM   #5
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Originally Posted by HeadMistress View Post
There's more to boat insurance than just the bare boat...bed and bath linens, all the owner added electronics and appliances, personal property kept aboard, etc. and how the insurance company them. Does the policy provide replacement cost regardless of age or do the depreciate all of it. A friend who owned a 60' houseboat was always bragging that he had the "best insurance deal on the planet"...until a hose parted company with an open below-waterline thru-hull when no one was aboard and his 6 yr old boat sank in its slip. That was when he learned that his insurance only covered raising the boat and drying out the engines and generator...everything ON the boat including furniture, all appliances, bedding, even wall covering, was fully depreciated after 5 years. He never bragged about his "great insurance deal" after that.

Most real yacht insurance companies offer full replacement coverage for contents and personal items, usually for a pretty reasonable cost with a separate deductible from the agree hull value deductible. So when comparing insurance quotes, it's always a good idea to read ALL the fine print.

--Peggie
Well stated!

In the event of a total loss (assuming agreed value coverage)- the insured will receive the face value of the policy (agreed value), as well as the policy value for personal effects. Claims will take into account upgrades as well..
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Old 04-24-2021, 09:41 AM   #6
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Well stated!

In the event of a total loss (assuming agreed value coverage)- the insured will receive the face value of the policy (agreed value), as well as the policy value for personal effects. Claims will take into account upgrades as well..
Upgrade cost in addition to agreed value? Can you expand as I thought agreed value was it.
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Old 04-24-2021, 09:59 AM   #7
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Upgrade cost in addition to agreed value? Can you expand as I thought agreed value was it.
Sure.

Agreed value is the value set at policy inception- generally, what you stroke a check for. In the event that the survey exceeds the purchase price, most insurers are OK with offering coverage based on the survey value.

If hard upgrades are done (electronics, repower, watermaker, are examples), underwriting again generally has no problems adding that value to the policy.

On the other hand- if you purchase the boat for near nothing due to major deferred maintenance, and the survey reflects the purchase price as accurate due to condition, the value cannot be increased just due to changing the oil, filters, hoses, etc.
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Old 04-24-2021, 10:07 AM   #8
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Peter, thanks. I misunderstood before, I thought they paid more than agreed value if you added upgrades during a policy period. I now get you can increase the agreed value to new value due to upgrade.
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