EVALUATING A BOAT FOR INSURANCE
Establishing a boat's monetary value is one of the most important aspects of
owning a pleasure craft, not only from a seller's perspective, but also for other interested parties such as brokers, insurers, marine surveyors and lenders.When insuring a boat, setting the value of a brand new boat is somewhat straight forward as the selling price is a good measure of its value. What is more difficult is assessing the value of a boat factoring depreciation and normal wear and tear. How do you financially account for upgrades in amenities and equipment?
In general, there are two valuation methods for insuring boats: Actual Cash Vale and Agreed Value.
Assessing Agreed Value
This is the method most often used when writing a new policy. The insurance company will simply look to the current market value of the boat on the date the policy is signed; this current market value may be determined in several ways:
the sale price for a brand new craft,
a written assessment from a boat broker who works in the same market where the boat is insured, and who has a good reputation;
a survey provided by a marine surveyor approved by the underwriter, which gives the condition, details and a document with valuation of the vessel.
When the Agreed Value method is used, no depreciation is taken and the insurance company will pay the agreed upon insured value should you suffer a total loss to your vessel.
Assessing Actual Cash Value
The Actual Cash Value method more commonly applies to older boats since they depreciate over time, just like cars. However, there are exceptions. In some cases, boats are refitted or refurbished, which may increase their value.
While Actual Cash Value policies are less expensive to start, the do factor in depreciation, and will only pay out the current cash value of the vessel if it is declared a total loss.
For information on facts you should know about evaluating your boat, contact Harbour Insurance at 1-877-731-1224 and one of our marine insurance specialists will be pleased to assist you and arrange a policy that is custom designed for you and your boat.
EVALUATING A BOAT FOR INSURANCE
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