If it is deemed by an insurance company that a vessel is in such a state that it should be written off, the amount payable in the event of making a claim is likely to be dependent on the type of policy you purchased. An insurance company is likely to pay out on an actual cash value or agreed value policy.
In the process of implementing the insurance coverage, you are arranging for the ideal level of coverage to protect against a wide range of listed perils. If you take out a full coverage (also known as all-risks or comprehensive) policy, this will pay out in a wide range of situations, unless of course a restriction is written into the policy terms and conditions.
Loss cover provided in the event of physical damage
The types of losses for physical damage might well involve incidents relating to a collision with a floating object, a dock, or another boat. Acts of theft and vandalism are incorporated into a regular policy, as would damage to the vessel in the event of lightning, wind, and hail or wave action.
In the initial stages of arranging the insurance you really want to make certain that the right level of coverage is implemented to give the type of protection most required. You might require an all-risks policy that is able to provide protection while the boat is laid-up ashore in store, or when being tailored on the highway. A boat owner is required to take on the basic maintenance responsibilities; general wear and tear isn’t likely to be included under a standard marine insurance plan.
Comparison shop the marine insurance market
Prior to choosing which one of the specialized marine insurance companies to use for insuring your motor-driven yacht, PWC, or sailboat, you should really put in the effort to get multiple quotes from the different insurance providers. Since you’ll likely find that the pricing for the insurance protection can vary between the different insurance companies, it is beneficial to shop around in order to attract the most competitive deals.
One area that needs great thought and consideration would be the agreed amount paid out by the insurance company in the event of a total loss.
Agreed value insurance policies
If you take out an agreed value insurance policy, you would be able to claim the total sum insured for the hull and equipment that is listed on your insurance schedule in the event of a total loss. In situations of a partial loss, a claim will be determined by the extent of damage and settled on the replacement value of the damaged part or sustained damage.
An insurance company would cover the expense of purchasing a replacement part that was similar in relation to make and model to the item that was damaged beyond repair. Price depreciation as a consequence of age and wear isn’t factored into the claim pay outs for the agreed value policies — although you still might need to pay the deductible amount stated on the insurance policy.
The agreed value insurance aspect of the insurance is most likely to reflect the value of the hull and machinery, since you will likely find that items of equipment like in the outboard motor, trailer, canvas covers, and sails include a depreciation clause due to wear, tear, and age.
Many of the insurance policies vary in relation to the compensation offered in the event of a total loss, for this reason you should make certain to ask the insurance agent when
obtaining an insurance quotation.
Actual cash insurance policies
If you enact an insurance policy that states the actual cash value of the vessel will be paid in the event of a claim, you will receive a compensation amount that is in line with the market value of the vessel at the time of the incident. In calculating the amount to pay out, the insurance company will take into consideration depreciation due to age and condition when any payout figures are being established.
Beyond the amount deducted for depreciation, the insurance company will also deduct the policy deductible from any potential claim payout.
In the event of a partial loss to the vessel or equipment, the insurance company is likely to request full details of the loss or damage incurred in order that the insurance adjuster is able to calculate a fair settlement based on the value of equipment in the condition at the time of the incident.
An actual cash value insurance policy is in the more cost effective option, but it is important to be mindful that you’re paying a premium on an insurance plan that is gradually depreciating in relation to the insured value. Since the market value of the vessel is likely to gradually depreciate year-on-year, you will continue to play in same level of insurance premium, while the insured value that is payable in the event of the total loss continues to decline.