depreciation in the event of insurance claim?

[Rowroy]

Recently, I had to file a claim with my insurance company. They were great to deal with . . . until they told me the amount of the check they were issuing. It was significantly less than the amount of the loss (minus deductible). The claims agent told me that it was common practice to depreciate the value of a claim due to the age of the vessel and/or motor.

The agent did work with me to bring my total cost within reason by adjusting their depreciation. However, I really don't remember seeing anything pertaining to this in my policy (I'm looking into that again).

Is this really common practice? Has anyone else experienced this?

 

[tommays]

Re: depreciation in the event of insurance claim?

In my experience YES

BUT every insurance company is different , Its is easy to find out on cars all you have to do is talk to the body shops in your area and they will tell you which company's make you use aftermarket and recycled parts

Boat US starts to hit you very hard on outdrives at 15+ years even when you have been covered by them on the unit for 15 years

 

[kabcpapc]

Re: depreciation in the event of insurance claim?

It's called ACV or actual cash value. That happened to me some years ago when someone stole my outboard motor. My insurance agent didn't add replacement cost coverage to my homeowners policy as I had instructed him to. Since I didn't read the policy as I should have, I was left with the ACV (what I paid for the motor less depreciation). I couldn't even get a old used motor for what I got. Lesson learned.

 

[TilliamWe]

Re: depreciation in the event of insurance claim?

Rowroy, you have what is called an Actual Cash Value Policy. That's what your car insurance policy is too. It's the most common, and unless you asked for something different, that's what you get. They are usually the least expensive policies too.

But I'll ask you, and everyone else too, when it comes to replacement of a used outdrive or other mechanical part, why do you think you should get a brand new part in place of your used one?

That asked, if you get a Yacht Policy, there is no depreciation on repairs. But like anything, you have to ask for it, and actually read your policy, or have someone read it to you.

 

[Navy Jr.]

Re: depreciation in the event of insurance claim?

We purchased "Agreed Value" insurance. Also known as replacement insurance. Deductible, but no depreciation. Covers boat, motor, trailer and auxiliary equipment; but not personal items in boat, including fishing gear. This type of policy costs a little more, of course.

 

[Rowroy]

Re: depreciation in the event of insurance claim?

But I'll ask you, and everyone else too, when it comes to replacement of a used outdrive or other mechanical part, why do you think you should get a brand new part in place of your used one?

Very good point. I never considered that.

The one item that helped he was the fact that the powerhead and L/U has just been rebuilt. The entire unit had less than 4 hours on it. That was my one saving grace!

 

[sportsmanphil]

Re: depreciation in the event of insurance claim?

I am an insurance adjsuter (licensed for NC, VA and a few common disaster states) I stick to commercial and residential property but handle auto, BI and liability when needed.

Its not that "every insurance company is different' its more like every state is different. Insurance companies do not write policies, the states do.

It really depends on what happened to your boat (auto accident, tree fall on it in your yard, sink it in the ocean etc etc)

Most policies are ACV (actual cash value) For autos, bikes, boats and things with a 'book value' most companies use what is called 'fair market value' meaning they find what a good used unit runs for in your area. Some use just ACV which is book value, less items like hours, miles, prior damgae.

Replacement cost is hard to come by on anything that moves like a car, boat, bike. Unless it is filed under your homeowners or someone else is at fault which adds to the fight but sometimes comes out in the end better $$ wise.

When it comes to ACV or fair market value, it leaves room to argue a bit. If you do not like what your insurance company has done you have the right to dispute it. First step is to get 3rd party values, hire a public adjuster and then on to court. Most courts rule in favor for the insureds as its in the policy that any and all gray area is given to the insured. If the insurance company has crossed their t's and dotted their i's they may rule for the insurance company.

Hope this helps some.

 

[Rowroy]

Re: depreciation in the event of insurance claim?

I appreciate the advice. The cost to repair my lower unit was $1157.23 and the claim rep initially stated a payout of $523 due to depreciation. Then we began "bargaining" and the rep was willing to adjust the depreciation to $867.08. This is within $100 of my deductible of $200, so I was happy (as happy as I can be considering the circumstances).

 

[jay_merrill]

Re: depreciation in the event of insurance claim?

To me, it all boils down to one thing - did the insurer do what it comiitted to do under the terms of the insurance contract? If so, they have acted properly and honorably.

I tend to get pretty cranky with insurance companies, but the ACV policies are pretty much the norm and if that's what you paid for, that's what you should receive. As long as the product is fairly represented and honored, the transaction is within the realm of good business practices.

 

[TilliamWe]

Re: depreciation in the event of insurance claim?

...
Replacement cost is hard to come by on anything that moves like a car, boat, bike. Unless it is filed under your homeowners or someone else is at fault which adds to the fight but sometimes comes out in the end better $$ wise .

I agree with everything you said, but this. There are MANY boat insurers in MANY states that do indeed have "replacement cost" policies. And some are not that much more than ACV policies.

Navy Jr. be careful. There are many policies out there that have "Agreed Value" coverage, but only in the event of a total loss. There is still depreciation on partial losses/repairs. Are you sure you have no depreciation on repairs? Unfortunately, I have seen people not aware of this before.

 

[sportsmanphil]

Re: depreciation in the event of insurance claim?

I agree with everything you said, but this. There are MANY boat insurers in MANY states that do indeed have "replacement cost" policies. And some are not that much more than ACV policies.

Navy Jr. be careful. There are many policies out there that have "Agreed Value" coverage, but only in the event of a total loss. There is still depreciation on partial losses/repairs. Are you sure you have no depreciation on repairs? Unfortunately, I have seen people not aware of this before.

I know exactly what you are talking about but insurance advertisements, insurance agents and adjusters all disagree. However when it comes to the insurance company writing a check, its on me, the adjuster. Thats why adjusters are sticklers for verbage.

Replacement cost and "guarenteed replacement" are two different things.

In a nutshell, we will take my massive yacht, 1989 Basstracker 175 (round numbers to make this easy)

Average book value $4000.00

ACV would be $4000.00 (less 900 trailer, less 200 for scratched decals, less 300 for hours on OB) I leave with $2600 less my deductible!

Guarenteed replacement would be a 1988 Basstracker 175 found in Richmond VA for sale for $3300. Insurance company gives me a check for that boat price less my deductible.

By definition, replacement cost is the cost to replace an item with no limitations on inflation or age. If i sink my basstracker, my insurance company isnt going to head down to Bass Pro and buy me a 2009 Basstracker. Which is why you cannot figure true replacement cost on things like boats, motorcycles and cars.

If that was the case, people would be sinking their boats every few years

Because ACV isnt usually enough to replace a car or motorcycle or even a boat, we now have diminished value laws (which only relate to 3rd party claims) and supplemental insurance, insurance to cover what the primary insurance doesnt pay for.

Replacement cost really only applies to commercial and residential buidlings. If I put a 25 year roof on my house in 1980 at a cost of $2000.00 and a covered peril damages the shingles (wind for example) I will get replacement cost. So I call a roofer and he gives he an estimate in 2009 for $5000.00, I will get $5000.00 less deductible. Doesnt matter the age, nor inflation, I will get replacement cost as per my policy.

And that would be your true difference between 'guaranteed replacement' and 'replacement cost'

 

[tommays]

Re: depreciation in the event of insurance claim?

TilliamWe


My boat is trailered and the outdrive still looks like NEW and works like new with reseals ,trim hoses and any other maintenance necessary

I don't feel at 16 years IF i have and accidence it is suddenly not worth the cost of and = condition replacement unit

 

[smclear]

Re: depreciation in the event of insurance claim?

Two years ago, our 10+ year old pontoon was stolen. When all was settled, the insurance paid exactly what we originally paid for the boat. Furthermore, they explained that we could have increased the coverage to the point where it would cover the cost of a new boat. I'm not sure exactly what that would have meant to our premiums. Naturally, they would have gone up, I just am not sure how much. I don't know if this is normal or not. We have State Farm and live in Indiana. It's just another reason why I am willing to pay a LITTLE higher rate.

 

[Navy Jr.]

Re: depreciation in the event of insurance claim?

I agree with everything you said, but this. There are MANY boat insurers in MANY states that do indeed have "replacement cost" policies. And some are not that much more than ACV policies.

Navy Jr. be careful. There are many policies out there that have "Agreed Value" coverage, but only in the event of a total loss. There is still depreciation on partial losses/repairs. Are you sure you have no depreciation on repairs? Unfortunately, I have seen people not aware of this before.

I have the policy in front of me. On the declarations page is a summary of the coverage. It specifies the components covered for loss or damage (boat and auxiliary equipment, motor, trailer, personal property, commercial towing and assistance, watercraft liability, accidental fuel spill coverage, medical payments, uninsured boater). It also lists the amount of insurance/limit of liability, and the deductible, for each of the above listed items. The amount of insurance for the boat, motor and trailer was determined from the sales summary provided by the dealer.

Some items are subject to depreciation: protective covers (canvas); carpeting, upholstery, cushions, fabric; trolling motor; outboard motor and outdrive (but later in the policy is an endorsement that waives depreciation for the motor and outdrive); batteries; and the trailer.

Hope this helps.

 

[Rowroy]

Re: depreciation in the event of insurance claim?

Overall, I can't complain about this entire ordeal. My insurance company, Travelers, was most accommodating and the marina that did the repairs was very quick and professional. There was great dialog between the three of us at all times.

I guess the amount of depreciation was just a bit of a shock since it was based on the age of the outboard (at first) and not the condition - which, to be honest, is what I would do if I were an insurer.

 

[marquette]

Re: depreciation in the event of insurance claim?

i had a 17 ft Crestiner destroyed in a storm about 5 yrs ago. it was docked and was flipped over by straight line winds. i have Allstate insurance and they cover my boats,cars and house. the first price the adjuster gave me was a depreciated value on the boat and motor. i was surprised that they did include the trailer even though it wasn't damaged because they said on this type of boat they dealt in package prices. i argued that i couldn't replace the boat witht the equivilant used boat for the quote. so they made me take it to a third party for a complete rebuild estimate. they then raised their offer slightly. my saving grace was that i had been insured with them and the same agent for 25 + years. i let him know that if i had to settle for their offer i couldn't trust them if i ever had a claim on a car or my house so he got involved. they never did raise their offer on the boat and motor but they had me list everything that was in the boat from split shot to my depth finder and gave me replacement cost from my home owners policy. then they offered to sell me the boat, motor and trailer for a salvage cost of $200. i was able to get $1000 for salvage. so when all the numbers were combined i got what i felt was the right number to start with but it was a hassle and time consuming. i had my boat motor and trailer insured for $4500 and their intial offer was $2300. i had owned the boat for about 5 years. so they must have been figuring about $400 depreciation per year. so i guess a person should call his insurance company every year and ask them how much they depreciated your boat and lower the insurance coverage by that amout and of course lower the premium because what you have it insured for and what they will pay you are two differant things.

 

[sportsmanphil]

Re: depreciation in the event of insurance claim?

Overall, I can't complain about this entire ordeal. My insurance company, Travelers, was most accommodating and the marina that did the repairs was very quick and professional. There was great dialog between the three of us at all times.

I guess the amount of depreciation was just a bit of a shock since it was based on the age of the outboard (at first) and not the condition - which, to be honest, is what I would do if I were an insurer.

Travelers is a good company. I find them a bit more strict in NC than in VA though, not sure about your state. However it doesnt suprise me that they worked on the price a bit with you as they have a good history.

Funniest boat claim I ever had was on a lake here in NC with ERIE insurance. The boat was in a dock lift at the time. Guy walks out and finds around 40 - 50 turkey buzzards all over his pontoon. He spooks them off and found the damgae. DANG! those buzzards tore that boat up. Seats were trashed, carpet was trashed, vinyl cut up and stuffing pulled out.

I saved this guy a heart attack. His policy on the boat (not an all risk policy) excluded varmits. So his boat insurance had no coverage! But because his motor was less than 50 hp, I was able to cover it under his homeowners policy (motor limits on HO's in NC) Which not only covered the damage but also gave him full replacement cost. The boat was only 2 years old so he was able to order the exact seats new and a local marina was able to replace the carpet. I even had his dock pressure washed (covered in poop).

 

[OldePharte]

Re: depreciation in the event of insurance claim?

This is a very informative thread.

Too many people only look at the $$ of insurance, not fully realizing what is exactly covered and for how much until you have a claim. Then it may be too late.

One also has to read all of the contract and not just the declaration page. Talk to your agent to explain coverages in case of a loss. If you still have any questions, get the answers in writing to assist in future coverage disputes. Read each renewal policy carefully as they may have inserted limitations or reservation that were not on your original policy.

 

[sportsmanphil]

Re: depreciation in the event of insurance claim?

This is a very informative thread.

Too many people only look at the $$ of insurance, not fully realizing what is exactly covered and for how much until you have a claim. Then it may be too late.

One also has to read all of the contract and not just the declaration page. Talk to your agent to explain coverages in case of a loss. If you still have any questions, get the answers in writing to assist in future coverage disputes. Read each renewal policy carefully as they may have inserted limitations or reservation that were not on your original policy.

You are very right but let me add one twist. After you talk to your agent, contact the company adjuster! In my professional experience, agents dont know jack about the nitty gritty of a policy. They make more verbal mistakes than you could shake a stick at. Agents are in the business of selling a policy and they love the quote "you are fully covered" NOTHING is fully covered.

Auto insurance is a scam which is why I will have nothing to do with it. I find the most $$ legally under ones policy, just like the guy I mentioned above.

So if you really want to know how your policy will pay, call the company's adjusters and ask.

 

[H8tank]

Re: depreciation in the event of insurance claim?

I made sure I got the agreed value type policy, I set the value. If my boat gets stolen or destroyed, I get a check for more than I paid for my boat to replace it.