Another Insurance question

Hello Forum!

I am closing on a 1982 Kadey Krogen 42 that will primarily be used on the Chesapeake. I have an insurance quote from Gallagher Charter Lakes, but they will only insure up to the sales price, NOT the Survey value. My question is...are there any insurance companies that will insure an older boat up to the Survey value? Any recommendations will be GREATLY appreciated!

Recently purchased a 1982 boat as well, with insurance thru Red Shield. My insurance policy is written on agreed value which includes purchase price, plus costs of purchase like sales tax, documentation, etc, added about 15% to the purchase price. I could have raised it to a higher value, but purely coincidentally, the surveyed value just happened to be EXACTLY what I paid for it . . ..

If I were to get a legitimate appraisal for what the boat is actually worth, my understanding is that the insurance company would have no problem making that the "agreed value", with a corresponding increase (probably minimal) in premiums of course!

lewismd007 said:

Hello Forum!

I am closing on a 1982 Kadey Krogen 42 that will primarily be used on the Chesapeake. I have an insurance quote from Gallagher Charter Lakes, but they will only insure up to the sales price, NOT the Survey value. My question is...are there any insurance companies that will insure an older boat up to the Survey value? Any recommendations will be GREATLY appreciated!

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You might check with IMIS (Gowrie Group) on Kent Island. They're insurance brokers so might find several options for you. We've been insuring through them (various underwriters) since mid-90s, very easy to deal with.

-Chris

Boat/US insured mine for the survey value plus some new equipment I put on just after the purchase. This year they dropped the value on renewal. I called them and asked why, no good reason so I asked what I could insure it for. They looked in some database and said I could raise the agreed value more than I ever had so I bumped it up.

slowgoesit said:

Recently purchased a 1982 boat as well, with insurance thru Red Shield. My insurance policy is written on agreed value which includes purchase price, plus costs of purchase like sales tax, documentation, etc, added about 15% to the purchase price. I could have raised it to a higher value, but purely coincidentally, the surveyed value just happened to be EXACTLY what I paid for it . . ..

If I were to get a legitimate appraisal for what the boat is actually worth, my understanding is that the insurance company would have no problem making that the "agreed value", with a corresponding increase (probably minimal) in premiums of course!

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This is correct- your Red Shield policy will indeed look at increasing values based on upgrades, survey value, etc.

lewismd007 said:

Hello Forum!

I am closing on a 1982 Kadey Krogen 42 that will primarily be used on the Chesapeake. I have an insurance quote from Gallagher Charter Lakes, but they will only insure up to the sales price, NOT the Survey value. My question is...are there any insurance companies that will insure an older boat up to the Survey value? Any recommendations will be GREATLY appreciated!

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Yes, there are. Touch base and I should be able to assist (fair warning- I’m in Cabo on vacation, so between my account executive and myself we should be able to get you sorted).

Fir you take a diamond ring to a jewel appraiser the first thing they will ask is if you are buying it, selling it or insuring it. There will be three different values on the same diamond.

Same thing with boats. Generally speaking, if you boat is suddenly "gone". Sunk, burned, crashed, whatever. You will only get what the insurance company wants to give, usually considerably less than you anticipated.

pete

Pete Meisinger said:

Fir you take a diamond ring to a jewel appraiser the first thing they will ask is if you are buying it, selling it or insuring it. There will be three different values on the same diamond.

Same thing with boats. Generally speaking, if you boat is suddenly "gone". Sunk, burned, crashed, whatever. You will only get what the insurance company wants to give, usually considerably less than you anticipated.

pete

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If the policy is agreed value, you know exactly what you will receive for a total loss. If actual cash value, then you and the insuring company will negotiate the value.

slowgoesit said:

.... purely coincidentally, the surveyed value just happened to be EXACTLY what I paid for it . . ..

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Every survey I've ever has set the value as exactly what the P&S shows. The last one, he asked me for the P&S and used the sale price on the survey form.

Surveyors are for physical soundness of hull, deck and superstructure and the mechanical soundness of its various systems. A Broker is more apt to have his finger on the pulse of the market and boat valuation. IMHO

Pau Hana said:

If the policy is agreed value, you know exactly what you will receive for a total loss. If actual cash value, then you and the insuring company will negotiate the value.

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Absolutely. Pau Hana knows what he is talking about. An agreed value is exactly what it sounds like, a contractual agreement between insured and insurer. It is clearly stated in the policy wording. In the event of a Total Loss the insurer pays the Agreed Value and takes possession of the remains of the vessel.

~A

Shrew said:

Every survey I've ever has set the value as exactly what the P&S shows. The last one, he asked me for the P&S and used the sale price on the survey form.

Surveyors are for physical soundness of hull, deck and superstructure and the mechanical soundness of its various systems. A Broker is more apt to have his finger on the pulse of the market and boat valuation. IMHO

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It is all about who you ask.
As Shrew notes, surveyors may not be as aware of actual values as brokers.
Then you get the people in the insurance broker's office who are writing the policies. Any who do general insurance are less likely to have their finger on the pulse of the boat market as those who only sell boat insurance, if there are any that specialize to that extent.
I have had surveys every 7 years on each boat I have owned over the past 44 years. Most times, what I recall of the surveyor's valuation is that I was asked what I thought, and that ended up being the value in the survey, or very close to it.
I don't put a lot of stock in the accuracy of that number, and only in the case of a total loss would it matter.

koliver said:

It is all about who you ask.
As Shrew notes, surveyors may not be as aware of actual values as brokers.
Then you get the people in the insurance broker's office who are writing the policies. Any who do general insurance are less likely to have their finger on the pulse of the boat market as those who only sell boat insurance, if there are any that specialize to that extent.
I have had surveys every 7 years on each boat I have owned over the past 44 years. Most times, what I recall of the surveyor's valuation is that I was asked what I thought, and that ended up being the value in the survey, or very close to it.
I don't put a lot of stock in the accuracy of that number, and only in the case of a total loss would it matter.

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Agree. For a boat that is not brand new the sources available to the Yacht Broker are the best source of market value data. The Yacht Broker (as distinct from the Insurance Broker) has access to the asking and closing prices and time from listing to sale of every boat on Yachtworld (and presumably other data). They also know what features add or deduct value from your specific boat. On request a Yacht Broker should be able to provide a market analysis of recent sales/listings that will be pretty accurate. One off's excepted.

~A

Agree with the above mostly, but if the surveyor is just going to parrot the value shown on the P & S, then that needs to be stated as the purchase cost, not the "Value" that the surveyor puts his/her name on.
After we get along on the outfitting, (new hard bimini, solar, lithium batteries, etc) will be talking to our broker about raising the Agreed Value some to more accurately reflect the value of our boat with the new upgrades.

My thought is that insurance is meant to mitigate your financial risk in case of a loss.

Using that as a baseline, when you buy a boat your financial risk is the purchase price of the boat, regardless of the survey value.

In my opinion that should be the amount insured for.

If you make substantial improvements to the boat after the purchase then you can go back to your insurer with documentation of those improvements and raise your agreed to value.

That's what I did. We bought our boat, insured it for the sale price and immediatly put it in a boat yard for a repower and refit.

At the completion of the refit I sent Pete a summary of the refit (provided by the boat yard) and my insurer raised my agree to value by that amount.

Now a decade later my insurer GEICO marine reduced the agreed to value to be more in line with other boats of my vintage but still on the high end of what I consider a reasonable price if i had to replace my boat.

Today if i had a total loss I feel that i would be able to buy the same model and year boat in good condition, plus outfit it the same as my current boat.

That is all I'm asking of my insurer, and that is what they are agreeing to do.

slowgoesit said:

Agree with the above mostly, but if the surveyor is just going to parrot the value shown on the P & S, then that needs to be stated as the purchase cost, not the "Value" that the surveyor puts his/her name on.
After we get along on the outfitting, (new hard bimini, solar, lithium batteries, etc) will be talking to our broker about raising the Agreed Value some to more accurately reflect the value of our boat with the new upgrades.

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That is the right way to go about it IMO.

The Surveyors frankly have an impossible task in setting an objective 'value'. They are paid by the buyer who wants to see a high value. Their only repeat customers are the Yacht brokers that recommend them to their buyer and so they are under quite a lot of pressure to come up with a value that is roughly equivalent to the sale price because; The Yacht broker wants a value that is roughly equivalent to the purchase price (or higher) so as not to spook the buyer; the buyer's broker won't want a low value to act to the detriment of any financing needed to close the sale since the surveyors valuation will also determine the Loan To Value calculation and therefore the maximum loan available from any finance company helping to close the sale.

However good the surveyor, I would put much more confidence in the survey findings which is where the surveyors expertise can shine than the value established.

~A

ksanders said:

My thought is that insurance is meant to mitigate your financial risk in case of a loss.

Using that as a baseline, when you buy a boat your financial risk is the purchase price of the boat, regardless of the survey value.

In my opinion that should be the amount insured for.

If you make substantial improvements to the boat after the purchase then you can go back to your insurer with documentation of those improvements and raise your agreed to value.

That's what I did. We bought our boat, insured it for the sale price and immediatly put it in a boat yard for a repower and refit.

At the completion of the refit I sent Pete a summary of the refit (provided by the boat yard) and my insurer raised my agree to value by that amount.

Now a decade later my insurer GEICO marine reduced the agreed to value to be more in line with other boats of my vintage but still on the high end of what I consider a reasonable price if i had to replace my boat.

Today if i had a total loss I feel that i would be able to buy the same model and year boat in good condition, plus outfit it the same as my current boat.

That is all I'm asking of my insurer, and that is what they are agreeing to do.

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+1 Nicely summarized.
~A.

Our 1981 Hatteras 42 LRC came into our lives right at a year ago. Surprisingly Boat US/Geico ended up working with us very well including agreed value based on survey...

What happens when the "agreed value" is now considered "over insured" by the insurance company due to total loss of vessel? Yeah, years of litigation.

ancora said:

What happens when the "agreed value" is now considered "over insured" by the insurance company due to total loss of vessel? Yeah, years of litigation.

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No that is the whole point of having an "Agreed Value" It is a contractual provision that is stated as being mutually agreed by the insurer/insured.

Example: In my prior business the largest floating vessels that we arranged insurance for were 5th & 6th Generation Semi-Submersible Drilling Rigs which cost around $500M - $750M to build. However the amount that they are insured for, on an Agreed Value basis, is an amount that reflects their worth to their owners at a point in time. That amount can fluctuate greatly with the price of oil and the degree of desire on the part of Oil Companies to incur the expenses of drilling the ultra-expensive deep-water, deep wells that these rigs are designed to drill. So in one year with no or little work, the Owners might insure such a rig for $450M. Oil goes up in price and with it the earnings the rig can attract, and the next year they will insure it for $750M.

It's the same rig, with the same equipment on board but its real market value fluctuates and the Insurers of these behemoths understand this fluctuation and when the loss occurs they will pay what is agreed.

(The Deepwater Horizon, which became a total loss following the Maconda/BP blowout was settled as a Total Loss for the Agreed Value by insurers within 10 days of the Insured tendering notice of abandonment.)

Coming back down to earth with our Trawlers. Insurers will be cautious about accepting an Agreed Value that does not pass their smell test because it seems too high or too low. So there may well be push-back from an insurer at the time of completing the application and applying for coverage, however once the insurer agrees to bind coverage at a certain Agreed Value the insurer has no legal leg or argument to avoid settling a valid claim for that amount. The only 'out' on the insurer's side is to prove fraud on the part of the insured which would of course void the contract ab initio.

~Alan

Hi there -- is this the Kadey Krogen 42 you purchased? It seemed like a great deal if so. I was drooling from afar (Florida) before I'd realized it wasn't practicable to pursue this boat at this time.
I'm currently out of the trawler lifestyle but if we get back into it a Krogen 42 is the way to go. Have you owned a trawler previously, and what condition is this one in? It looked like a good deal. There's much info on here re: Kadey Krogen 42s. All the best to you, Mark

Living in FL, we are forced to have Geico as it is one of about the only that will insure us in this State. Repeated attempts to gain additional coverage have failed. We brought a used charter boat and spent additional $100,000 getting it up to snuff, including water maker, all new and additional electronics, total redo everywhere. Geico won't budge - all that new equipment and they say doesn't matter. My sad day will be when we sell this boat but my happy dance will occur when I can tell Geico good bye.

Finally Fun Again said:

Living in FL, we are forced to have Geico as it is one of about the only that will insure us in this State. Repeated attempts to gain additional coverage have failed. We brought a used charter boat and spent additional $100,000 getting it up to snuff, including water maker, all new and additional electronics, total redo everywhere. Geico won't budge - all that new equipment and they say doesn't matter. My sad day will be when we sell this boat but my happy dance will occur when I can tell Geico good bye.

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How about if you got a new survey? Last fall the below came with our Geico Marine renewal policy. The agreed value was dropped $60K for our 1987 KK42. It looked like I had the option of a new survey and could get a higher agreed valve.

Please note, underwriters have performed a regular review of the agreed hull value and have adjusted coverage to align with the current market value. The current agreed value is $xxx,000. If you wish to continue to insure the vessel at $xxx,000, please submit a recent condition and valuation survey for underwriting to review.

Finally Fun Again said:

Living in FL, we are forced to have Geico as it is one of about the only that will insure us in this State. Repeated attempts to gain additional coverage have failed. We brought a used charter boat and spent additional $100,000 getting it up to snuff, including water maker, all new and additional electronics, total redo everywhere. Geico won't budge - all that new equipment and they say doesn't matter. My sad day will be when we sell this boat but my happy dance will occur when I can tell Geico good bye.

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That sucks. Just wondering did you try providing the insurers with a detailed listing of upgrades including receipts and photos? It might be worth doing if you haven't already tried. ~A

ancora said:

What happens when the "agreed value" is now considered "over insured" by the insurance company due to total loss of vessel? Yeah, years of litigation.

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Total loss of a vessel (per the policy language) results in settlement at the agreed value.

There is nothing to litigate after the fact, unless the insured had not paid his premium.