"Stated Value" Boat Insurance

[syoun10]

Can anybody explain this to me?

My boat insurance is a "stated value" policy (I believe most boat insurance policies are). The actual value stated is what I paid for it when new (this is when the insurance started).

Now, however, several years later, the real value is very substantially less - but the stated value hasn't changed, nor has the premium.

I'm not familiar with "stated value" insurance - no other of my policies has this feature. But my understanding is that if the boat were to be a total loss, they would pay the original stated value - much more that the boat is now worth. That doesn't seem to make sense as it would constitute a reason for someone to total their boat on purpose - just for the claim.

I tried to discuss this with my insurance agent, but he seemed to get suspicious as to what my motives were, so I didn't pursue it.

I've certainly got no interest in defrauding anyone, (and anyway, I love my boat). But if "stated value" doesn't mean what I think it means, them I am presumably paying much too high a premium.

Any comments?

PS Since sending this, somebody has pointed out that "stated value" and "agreed value" are not the same thing - and I'm not absolutely sure offhand which I have. So my question still stands, and I would also ask whether others answering this have a "stated value" or "agreed value" policy?

 

[Ron-Anne]

We have a 1990 H30 and our insurance "guy" won't cover the boat, so you can't get a more realistic value in order to reduce your premium and we can't get a value. Good luck.
Ron

 

[Victory]

I'm with BoatUS... a few years back I increased the replacement value of my policy based on improvements I'd made............ the premium was increased proportionately.

Your premium is based on the face value.... whether stated or agreed..... so if you want to lower the value of your policy.... ask them how much the premium will go down.... it shouldn't make any difference to the ins company unless a huge increase is requested in which case a survey might be required.

 

[Rick D]

Not Enough Info...

My boat insurance is a "stated value" policy
Now, however, several years later, the real value is very substantially less - but the stated value hasn't changed, nor has the premium.

I'm not familiar with "stated value" insurance - no other of my policies has this feature. But my understanding is that if the boat were to be a total loss, they would pay the original stated value - much more that the boat is now worth. That doesn't seem to make sense as it would constitute a reason for someone to total their boat on purpose - just for the claim.

I tried to discuss this with my insurance agent, but he seemed to get suspicious as to what my motives were, so I didn't pursue it.

Any comments?

PS Since sending this, somebody has pointed out that "stated value" and "agreed value" are not the same thing - and I'm not absolutely sure offhand which I have. So my question still stands, and I would also ask whether others answering this have a "stated value" or "agreed value" policy?

Uh, these terms vary in real application policy to policy. If the valuation is high, you can seek to reduce it and the premium should reduce accordingly. However, the value can be a simple limit, it can be the pre-set total loss value, etc. So, I suggest you re- contact the agent and don't leave until you get a proper explanation. He/she's making a commission; they owe you service. Look over the policy 'definitions' 'conditions' and 'loss' language.

 

[syoun10]

I'm with BoatUS... a few years back I increased the replacement value of my policy based on improvements I'd made............ the premium was increased proportionately.

Your premium is based on the face value.... whether stated or agreed..... so if you want to lower the value of your policy.... ask them how much the premium will go down.... it shouldn't make any difference to the ins company unless a huge increase is requested in which case a survey might be required.

But Victory, what I don't understand is... several years from now, your boat will presumably be worth less. If you have a total loss, will the insurance company give you the money for the value it was when you took out the policy, or for the current (lower) value at the time of the loss? If for the latter, are you paying a decreasing premium each year to recognize this lower potential payout?

I don't necessarily want to lower the value of my policy as long as I know I will truly get compensation equivalent to the ORIGINAL (or "stated") value, rather than the depreciated value at the time of the loss. (After all, the premium I'm paying does relate to the ORIGINAL value - not current actual value)

 

[syoun10]

Uh, these terms vary in real application policy to policy. If the valuation is high, you can seek to reduce it and the premium should reduce accordingly. However, the value can be a simple limit, it can be the pre-set total loss value, etc. So, I suggest you re- contact the agent and don't leave until you get a proper explanation. He/she's making a commission; they owe you service. Look over the policy 'definitions' 'conditions' and 'loss' language.

Yes, Rick, I should read the policy (if I can find it!). However, not being a lawyer, I'm not too confident that my interpretation of the legalese in the document would be a 100% correct interpretation. And since the agent only represents this one company, I'm not 100% confident that he will give me a true answer (or, for that matter, whether he even fully understands the issue). When I first contacted him, he seemed to be weaseling (whether through lack of his own understanding, or because he didn't want to tell me anything that would lose him my business, I'm not sure.) It was my pushing him that led to his reaction that seemed to be questioning my motivations.

That's why I'm looking for how others are insured and what is "normal" in the boat insurance world.

 

[Rick D]

Well....

But Victory, what I don't understand is... several years from now, your boat will presumably be worth less. If you have a total loss, will the insurance company give you the money for the value it was when you took out the policy, or for the current (lower) value at the time of the loss? If for the latter, are you paying a decreasing premium each year to recognize this lower potential payout?

I don't necessarily want to lower the value of my policy as long as I know I will truly get compensation equivalent to the ORIGINAL (or "stated") value, rather than the depreciated value at the time of the loss. (After all, the premium I'm paying does relate to the ORIGINAL value - not current actual value)

I hate generalizing since these policies can vary a lot, but your policy must state that the agreed value is that value you will recover (and no more) in the event of a total loss for it to do what you want. Otherwise, it may simply be that you get whatever the current market value is for a vessel in your condition, with your equipment, in your area (not necessarily exactly the same as yours). In fact, even the so-called agreed value policy may give the company the option to replace your boat rather than give money, although it is a rarely exercised option. Ugly as it sounds, you just gotta pour a drink and start reading.

 

[Don S/V ILLusion]

Insurance can appear a vague mystery to lots of people and having an agent who won't provide straight-forward answers for you is a good indication of how he will treat you when/if you have a claim.

All I can add is don't be too quick to lower the stated value because your coverage for any loss other than a total loss will be decreased proportionally.

There are lots of agents and underwriters who would love to have your business and who also care about customer relations and satisfaction. You should find one.

 

[anchorclanker]

There are a lot of these types of policies with antique and older exotic cars. Generally, a stated value policy means they will NOT pay you more than you stated the object is worth.

However, most policies, if not all, allow the company to determine the objects "real" value should a claim arise. So while they wont ever pay you more than you stated it was worth, they may (and usually will), try to come up with a lower value. For those reasons it is always a good idea to watch the market andtry to have a good (and realistic) idea of what your boat is truly worth, as well as to be able to back it up with comparable's as well as receipts and photographs of extra equipment and condition.

 

[wufibugs]

Anchor is correct. Stated value or agreed value is the maximum they will pay, but not necessarily what you will get when a loss occurs. That is pretty much determined by the marine equivalent of the Blue Book and some down and dirty negotiations. There is little point in arguing them up on some agreed figure that will increase your premium unless you are confident you can make an iron clad case for why your boat was worth more than similar models [or you are willing to make a lawyer rich to gain a grand or two, or have a hit man is indebted to you]. If there are things that distinguish your production boat from the others, you need to document that now rather than asking the salvage diver to get some good underwater pictures of your 55" flat screen.

 

[obsailor]

Boat US Insurance terms and payout

Boat US paid me in full and quickly for the "total constructive loss" of my boat damaged by Hurricane Sandy. Line A of my policy is titled "Amount of Insurance and Agreed Value". No deductions, depreciation or hassle; they also offered me a discounted right of salvage.

No discussion about pro-rating, condition of vessel or any figure other than the insured value. The boat still floated, mechanical systems all ok, rig still standing but hull grinding (C&C 35) and hull/deck damage from boat yard damage too much to repair.

I am (of course) using Boat US again on replacement boat

 

[Joe]

But Victory, what I don't understand is... several years from now, your boat will presumably be worth less. If you have a total loss, will the insurance company give you the money for the value it was when you took out the policy, or for the current (lower) value at the time of the loss? If for the latter, are you paying a decreasing premium each year to recognize this lower potential payout?

I don't necessarily want to lower the value of my policy as long as I know I will truly get compensation equivalent to the ORIGINAL (or "stated") value, rather than the depreciated value at the time of the loss. (After all, the premium I'm paying does relate to the ORIGINAL value - not current actual value)

It doesn't work like that........ it's more like term life insurance. Or personal property insurance. When you total an automobile it's based on a bluebook value, I think... but it isn't the same as a boat. Otherwise they'd have to have a survey every year. Used cars are pretty easy to value.... but used boats.... especially when they get older are very difficult.... and once they get to a certain age the value is all in condition and equipment...... not year built. Besides......... what other purpose would "stated value" serve?

But truthfully, your question should be directed to your insurance provider for clarification..... a simple phone call should do it..... call the claims department. Hey, and if you can't get a straight answer..... change insurance carriers... now... I recommend BoatUS.

Another assumption you've made is that boats depreciate in the same way cars do...... that's simply not the case. My '77 model is worth more today than what I paid in 1999. If you've maintained your boat well during your ownership, and added equipment, such as solar, electronics, extra sails, new bottom surfacing, upgraded rigging and hardware.....then it is of much greater value to someone than a same age boat that has been maintained poorly and has no amenities...

 

[Steve Dion]

syoun:

I think you may want to consider looking for a different insurance agent/company. Have you checked out BoatUS or some other "real" boat insurance companies?

Can I guess that your insurance is through someone like Allstate, Farmers etc?

 

[Joe]

syoun:

I think you may want to consider looking for a different insurance agent/company. Have you checked out BoatUS or some other "real" boat insurance companies?

Can I guess that your insurance is through someone like Allstate, Farmers etc?

Amen, Steve....... I concur

 

[oldersalt]

"That doesn't seem to make sense as it would constitute a reason for someone to total their boat on purpose - just for the claim."

It's happened more than once. It's called "converting your boat to a liquid asset."

 

[Sailvayu]

Stated value or agreed value is the value you and the insurance company agree what your boat is worth. This is usually based on the value your surveyor will place on the vessel when doing the report. This is the main reason many insurance companies want a survey. Blue book is not used for anything but small outboards. As most know a vessels value cannot accurately be determined based on just age and depreciation like a car. Too many variables like equipment and upgrades. This value is really only used for TCL, equipment and damage loss will use depreciation. Talk to your agent as it varies with company. Marine insurance is not regulated like car or home owners so can vary quite a bit.

Capt. Wayne Canning, AMS
www.Capt. Wayne Canning, AMS

 

[HukilauMike]

When I first bought boat insurance (Progressive), I had an agreed to value that stayed the same year after year. I eventually switched my boat insurance to the same (excellent) carrier I had for my home, auto and umbrella insurance, saving a nice percentage on the premium. However, every year upon renewal, my carrier tgries to adjust the agreed to value down. I have had some long talks with them about how you just can't depreciate a boat built in 1979 down much further, but they still try and screw with me every year.

 

[Terry in Naples]

I had a boat totaled with progressive and they paid market value not the value they were collecting premiums on. They told me it was my responsibility to lower the value every few years. This would have meant lower premiums. Take it or leave it. Learned a good lesson that day. Good luck to you. ( my big boat is with boat us. Expensive yes but no nonsense when you have a claim. )

 

[anchorclanker]

"That doesn't seem to make sense as it would constitute a reason for someone to total their boat on purpose - just for the claim."

It's happened more than once. It's called "converting your boat to a liquid asset."

Yeah, it happens. And the rest of us have to pay for it. But thankfully there are enough people watching that they'll probably only get away with it once. I would imagine it hit a peak during the housing crisis as people ran out of money. I would also imagine that if it happened again they would mount a pretty good investigation into the cause.

 

[reworb]

As a long time boat owner and reformed attorney(retired). I am most familiar with an Agreed Value policy or an Actual Cash Value Policy. In the case of a total loss an Agreed Value policy will pay the agreed value , no deduction for depreciation the value agreed upon is what you get less the deductible. In the case of an Actual Cash Value policy you would get the current value of the boat less the deductible but never more than than the face value of the policy. I assume in your case that the face value of the policy is the Stated Value. The Actual Cash Value type of policies are what cause the most problems as you think your boat is currently worth X and the insurance company says your boat is worth Y.

If your Agent cannot explain this, get a new agent. For a late model boat like you have I would go with a "real boat insurance company" and not one the auto or general line companies. The auto companies are fine for little power boats but not for 30 foot plus sailboats. I have 31 foot sailboat insured with a real boat insurance company and a 13 foot Whaler insured with the same company that insured my cars