How does "Total Loss" insurance claim work?

So first of all... It was 100 percent my fault and no one got seriously injured.

So I have a boat that damage exceeds the insurance amount.
If I put ion a claim for a total loss the insurance company will own my boat and I will have to buy back the salvage value.

This only hurts a little as I tried to insure for more (based on surveyors value) when I signed up.

On one hand I'm inclined to eat it as penance for my behavior that led to the loss.

One the other hand, is there a work around?

PMF1984 said:

So first of all... It was 100 percent my fault and no one got seriously injured.



So I have a boat that damage exceeds the insurance amount.

If I put ion a claim for a total loss the insurance company will own my boat and I will have to buy back the salvage value.



This only hurts a little as I tried to insure for more (based on surveyors value) when I signed up.



On one hand I'm inclined to eat it as penance for my behavior that led to the loss.



One the other hand, is there a work around?

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It would seem to depend on whether the insurance payout is more than the salvage buyback value. In that case you would at least net some cash. And it seems that the insurance payout MUST be more than the buyback cost, right? Otherwise the boat would be grossly underinsured, which maybe it is?

If I understand it correctly, buying back a boat comes with some possibly unforeseen issues like a "salvage" title which can cause low valuation for resale and possible difficulty in ever getting insurance.

So to put some numbers —. the boat was insured for 125. The value at the time of the survey was 157. But the insurance company would not give me cover for more than 125.

The salvage value, according to the insurance company, is 10-20, and insurance company is offering up 15 for an agreed value.

PMF1984 said:

So to put some numbers —. the boat was insured for 125. The value at the time of the survey was 157. But the insurance company would not give me cover for more than 125.

The salvage value, according to the insurance company, is 10-20, and insurance company is offering up 15 for an agreed value.

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To me it seems the insurance co would let you keep the salvaged boat and pay you 125-15 or 110 minus your deductible.

First, read section (I think)D
" What we will pay in event of a loss" and go from there. Two policies sound the same but are not. "Agreed value" and " stated value" are different. One is a firm price, the other says "value **OR** Actual Cash Value (ACV) whichever is less"
The salvage value can be reduced by the cost of maintaining the vessel (storage) from the loss till now. If they want the salvage, it is THEIR responsibity to pay that, and remove the salvage etc. Use that argument to reduce the salvage value they want from you. Depending on the type of loss, etc. You may be able to cut a deal for them to pay just under the value less salvage and not "total" it with the attending problems.
And good luck!!

And before you get too deep into a plan to continue boat ownership, best to figure out whether you can get insurance on a boat going forward, be it this boat in salvage condition or a replacement. Big claims might impact that.

I have to ask, what happened?

I owned Possum for twenty eight years when she sank at the dock during a hurricane. I had her re-floated and the engine pickled in less than a week. The insurance company repaid me for the salvage cost, paid the amount stated by the policy, and took possession of the boat. They offered to sell it back to me but I really didn’t want a project at that time. The money I recovered was just about what I had paid in premiums over the years.

When you pay premiums on an agreed value of $420K and the boat is declared a total loss, dont expect to get anywhere near the $420K. This is based upon my own experience.

OldDan1943 said:

When you pay premiums on an agreed value of $420K and the boat is declared a total loss, dont expect to get anywhere near the $420K. This is based upon my own experience.

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That's precisely what I would expect, possibly less salvage and cleanup costs depending on the wording of the policy.


Why was your payout less that the agreed value?

PMF1984 said:

So to put some numbers —. the boat was insured for 125. The value at the time of the survey was 157. But the insurance company would not give me cover for more than 125.

The salvage value, according to the insurance company, is 10-20, and insurance company is offering up 15 for an agreed value.

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But the agreed value is $125k, no? Time to read you policy and see what it says in the event of a total loss. I have encountered this before where the Ins company gives you a bunch of mumbo jumbo and offers some pittance of a settlement. Or is it not an agreed value policy?

I have sort of resigned myself to the fact that I have to pay out (actually a reduced payout by insurance company).

The problem going forward is that if I do want to keep the boat and fix it, I will need insurance. Everywhere I have ever been that I would want to keep the boat requires an insurance certificate.

PMF1984 said:

I have sort of resigned myself to the fact that I have to pay out (actually a reduced payout by insurance company).

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Can you explain why? It might be instructional for others.

I have insurance for up to 125. The salvage value is 15. So if I want to keep the boat, the insurance company will shell out 110 and call it even.

OldDan1943 said:

When you pay premiums on an agreed value of $420K and the boat is declared a total loss, dont expect to get anywhere near the $420K. This is based upon my own experience.

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Explanation please.

PMF1984 said:

The problem going forward is that if I do want to keep the boat and fix it, I will need insurance. Everywhere I have ever been that I would want to keep the boat requires an insurance certificate.

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Correct me if I am wrong, I would think the insurance needed would be liability and salvage costs. If that is possible to get separately.

An insurance company may no longer wish to insure the hull and replacement costs. And a marina does not care if you get the boat replaced. Just that the mess it creates in the event of a loss is covered to be removed. Same for any liability that the boat may cause to others.

Not sure if that kind of policy is available. And any insurance company would want to know that reasonable measures have been taken to limit that exposure. Like the vessel is not in a condition that it may go under again with reasonable prevention.

PMF1984 said:

I have insurance for up to 125. The salvage value is 15. So if I want to keep the boat, the insurance company will shell out 110 and call it even.

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OK, that makes sense. So remind me what the issue is? Is it just a question of whether you take the $125k insurance money and keep it all, or if you pay back $15k to keep the boat and fix it?

By my math, they pay $125k
They deduct $15k for salvage value, new payout is $110k
Was your deductible already applied? Or is that to be deducted from the $125k?

How badly was the boat damaged? Fully submerged? Ran into a dock? Is the damage mostly cosmetic, and the cost of repair is due to the high cost of labor? Are you capable of doing the repairs?
Can the boat be repaired by a licensed, professional, COMPETENT repair shop for, say half of the amount they are paying out?

I know this is easier said than done, but do you want the boat back because you have an emotional attachment to it? Sometimes it's best to just let it go.

Run the $$ numbers!
Is the boat a type/configuration that suits you perfectly, and you haven't seen any more like it on the market?
How long will it take you to repair it? Now double that time.
Figure the estimated repair costs, then double THAT number.
Figure in the cost of insurance while you repair, and while the boat is not usable, also moorage fees, or yard fees if on the hard.

Figure out if you want to spend the next 3 months, 6 months, two years (you get the picture) working on/repairing the existing boat, or spend that time enjoying a new to you boat?

Also, consider that the "salvage value" that the insurance company assigned to the boat is often times a number picked out of thin air, or a number that they think you may quickly pay. The salvage value of the boat, in reality in only the number that they end up realizing from a sale after storage fees, advertising fees, and other fees are added it. Many times it is actually worth it for the insurance company to actually just GIVE you the boat rather than risk the intangible sale price that they may realize from a sale. They also have the risk that the longer the boat sits, especially if there was significant flooding, and the engine/mechanicals were not properly cleaned/preserved, that they won't sell at ANY price, and they end up having to dispose of the boat at their cost, PLUS all the costs they incur up to the point they finally dispose of it.

If it were me (and I hope to never be in your position) I would suggest to the insurance company, that due to the large number of hurricane damaged boats on the market, they may end up saving money in the long run by just giving me the boat, and I'll sign off that it is now totally my responsibility to take care of and be liable for. Who knows, they may very likely go for it!

Note # 1: On a side note, since they are "making you whole" from the total, if you don't buy the boat back from them, they are generally also on the hook for the sales tax on the amount they award you, since you'll have to pay that when you purchase a replacement boat. Works the same for automobile totals. If they deduct the "salvage value" from the payout, and you keep the boat, sales tax doesn't apply.

Note # 2: If the boat is a Federally documented boat, there is no such thing as a "Salvage Title", or Federally documented "Branded Title". If state titled, it's up to your individual state. Of course, at the time that you re-insure the boat, you are generally asked "has the boat ever sustained any major damage for which an insurance payout was made, or which was never repaired", or some such question. Best to answer truthfully!

Note # 3: If you "buy it back", all the fees from the date of the accident, including storage, salvage, towing, etc is most likely the responsibility of the insurance company, unless you agree to something else IN WRITING.

Best of luck in whatever you decide!