EVALUATING A BOAT FOR INSURANCE
Assessing the value of a boat is among the most important tasks of owning a pleasure craft
, for sales value and also to inform other parties like lenders, brokers, insurers and marine surveyors.For a new boat, this is a fairly simple task, since the price you paid for the boat is a relatively good standard for determining 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. This method uses the current market value of the boat at the time the policy is written and can be established in a variety of ways:
the purchase price if the vessel is new;
written confirmation from a reputable boat broker who operates in the same market in which the vessel is insured;
a survey by an underwriter-approved marine surveyor who can provide a condition, detail and valuation document on the vessel.
Under the Agreed Value method, there is no accounting for depreciation - if your vessel is a complete loss, then the insurance company will pay the full value listed in the policy.
The Actual Cash Value Methodology
The Actual Cash Value method is the method most often used when writing marine insurance policies for older boats, since they are subject to depreciation over time, just like cars. There are some occasions, however, when this may not be true. In some cases, boats are refitted or refurbished, which may increase their value.
Actual Cash Value policies cost less up-front but they factor in depreciation and only pay up to the actual cash value at the time the boat 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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