When a boat is written off by a boating insurance company, the amount that you will receive depends on the type of policy you buy. The insurance company may pay out based on agreed value or actual cash value.
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When you buy boat coverage, you are covered for the cost of having your boat repaired due to a number of perils. If you buy a policy for “all risk” coverage. This type of policy pays out on all losses unless they are specifically included in the policy language.
Losses Covered by Physical Damage
The kinds of losses that you would be covered for include things like a collision with another boat, a dock or a floating object. Acts of vandalism are covered, as well as the damage to the boat caused by hail, rain, wind, lightning and wave action.
You must decide what your boat insurance will cover. You may want to find a policy that will provide coverage for your boat if it is being stored, or while it is being transported on a trailer. As the owner, you are responsible for maintaining the boat properly. Normal wear and tear is not covered under your boat insurance policy.
Before you choose a boat insurance company to deal with, take the time to get quotes from several providers. Pricing for a similar level of coverage can vary, and by taking the time to shop around you will be able to get the best deal. Part of the decision-making process should involve considering how much you would be entitled to if the damage was severe enough to constitute a complete loss.
If your policy pays out according to the agreed value of the boat, you would be entitled to the amount of compensation listed on your policy document if a total loss occurs. If you have a partial loss, in most cases you would receive compensation based on the replacement value of the item or part of the boat that sustained the damage.
The insurance company would pay for the cost of buying a new item that was similar in make and model to the one that was lost. Any depreciation since the time you bought the boat is not factored in with this scenario. You will still be required to pay your deductible, though.
The value of certain items on the boat that experience a higher level of wear and tear, like sails, canvas, trailers and some types of machinery, may be depreciated when the insurance company is calculating the amount of compensation. Your policy language should spell out which items on board the boat will be handled in this manner.
Actual Cash Value
If you decide to buy a boat insurance policy that covers you for the actual cash value of the boat, you will receive a lower settlement if you report a total loss than if you had bought a policy that pays the agreed value of the boat. The insurance company would base its offer on the current market value of the boat. Depreciation from the time you bought it and its condition at the time of the loss are factored in when determining what this amount will be.
The amount you will receive after a total loss of your boat will not include your policy deductible. The insurance company will deduct this amount from any money you are entitled to.
If there is a partial loss, you would probably be asked to describe the items that were lost or damaged to the insurance adjuster. Your statement would help the company determine their value so it can make a settlement offer.
Which policy is best when a boat is written off by a boating insurance company? It depends on the level of protection you are looking for, as well as your budget. If you want to be compensated for the full replacement value so that you can buy a new boat that is similar to the one that was written off, then you should consider this level of coverage. It will cost more than one that pays out based on the actual cash value only, though.
Actual cash value is more affordable coverage in terms of the premium costs of boat insurance, but keep in mind that you are paying premiums on a policy that is offering a level of protection that keeps dropping over time. As your boat depreciates in value, the amount you will receive from the insurance policy payout goes down, but your premium stays level for the policy term you have chosen.
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