Call Us 1-800-829-5270 ☰ ˟
Southwest Florida Insurance
Call Us: 1-800-829-5270
  • Get A Quote ▼
    • Health
    • Homeowners
    • Auto
    • Specialty Vehicles
    • Business Insurance
    • Life Insurance
  • Our Products ▼
    • Our Products
    • Health ►⤵
      • Health
      • Individual Health
      • Medicare
      • Medical Supplements
      • Vision
      • Dental
      • Hospital Indemnification
      • Long term Care
    • Home ►⤵
      • Homeowners
      • Condo Owners Renters
      • Rental Property Insurance
      • Vacation Rentals
      • Umbrella Policy
      • Flood
    • Auto ►⤵
      • Personal Auto
      • Classic Auto
      • Motorcycle
    • Specialty Vehicles ►⤵
      • Motorhomes
      • RV's Boats
      • Jets Ski
      • Golf Carts
    • Business Insurance ►⤵
      • Liability Insurance
      • Property Insurance
      • Workers Compensation
      • Commercial Auto
    • Life ►⤵
      • Term Life Insurance
      • Permanent Life Insurance
      • Annuities
      • Disability
      • Long Term Care
  • Customer Service ▼
    • Customer Service
    • Make a Payment
    • File a Claim
    • Proof of Insurance or Insurance ID cards
    • Carrier Direct Support
  • Resources ▼
    • Refer A Friend
    • Our Carriers
    • Insurance Glossary
  • Blog ▼
    • Blog
  • About Us ▼
    • Contact Us
    • About Us
    • Our Locations
    • Employee Directory
    • Customer Testimonials
    • Privacy Policy
Health Icon

Health

We browse through a wide variety of coverages and find the right one for you.

Learn More
Auto Icon

Home

We browse through a wide variety of coverages and find the right one for you.

Learn More
Home Icon

Auto

We browse through a wide variety of coverages and find the right one for you.

Learn More
Commercial Icon

Business

We browse through a wide variety of coverages and find the right one for you.

Learn More
Life Icon

Life

We browse through a wide variety of coverages and find the right one for you.

Learn More
Home > Blog > The Boat and Yacht Insurance Policy ….How they Pay differs widely by Company
THURSDAY, NOVEMBER 5, 2015

The Boat and Yacht Insurance Policy ….How they Pay differs widely by Company

Sport Fish 2

When discussing insured value and how a boat insurance policy will pay, most people think about a total loss. This is important but the majority of claims are partial losses. Depending on how your policy responds could cost you several thousand dollars above your deductible.

A boat insurance policy has two different ways to pay in the event of a partial loss. One is to replace the damaged items new for old without deducting for depreciation. The second is to depreciate the damaged items in the event of a loss.

Depreciated Value is defined as Replacement Cost less depreciation. Most boat insurance companies use a non published depreciation schedule that applies to partial losses. An example may be 7% depreciation per year on a stern drive or 15% depreciation per year on canvas. You will want a policy that pays replacement cost for a partial loss when available.

Each insurance company will apply Replacement Cost and Depreciated Value differently. Read your policy carefully.

Some boat insurance companies do not provide replacement cost coverage for partial losses. If the boat is insured on this policy form, then no matter the type of loss, the replacement parts are subject to depreciation. If the part costs $2,000 and is subject to 20% depreciation, you would be paid $2,000, less $400 depreciation, less your deductible.

Some boat insurance companies provide replacement cost for partial losses until the boat reaches a certain age. The age will vary with each insurance company. Once a boat reaches that age, all partial losses are settled on an actual cash value.

Most boat insurance companies that provide replacement cost for partial losses name specific items that are subject to depreciation. Canvas, sails, cloth, trailers, and plastics are examples of specifically named items. These items generally have a limited life span. They also specifically name items to be depreciated based on the item’s age. Outboards, stern drives and internal machinery are examples of items that change from replacement cost to depreciated value based on their age. Each insurance company has different specifically named items and different ages when items change from replacement cost to actual cash value. Review the specifics of your policy for details.

Replacement Cost for a partial loss is what you want when available. A depreciated value can cost you several thousand dollars. Below are examples to help explain how replacement cost vs. depreciated value work.

Example 1 is an 11 year old boat with a $250 hull deductible that hits a submerged object. The replacement cost of the damage to the prop, shaft and strut is $5000.

Insurance company A provides replacement cost coverage until the vessel is three years old. The damaged prop, shaft and strut are 11 years old and subject to depreciation. Insurance company A will deduct 50% depreciation or $2500 from the $5000 replacement cost. You would be paid $2,250 ($5,000 replacement cost, less $2,500 depreciation, less your $250 deductible).

Insurance company B provides replacement cost coverage with specific named items subject to depreciation. The prop, shaft and strut are not specifically named items and are therefore settled on a replacement cost. Insurance company B would pay $4750 ($5000 less your $250 deductible).

Example 2 is an 8 year old stern drive boat with a $500 hull deductible that hits a submerged object. The replacement cost to the stern drive is $8000.

Insurance company A provides replacement cost coverage until the stern drive is six years old. They will apply 60% depreciation (7.5% per year) to the $8000 replacement drive and then apply the $500 deductible. Insurance company A will pay $2700 ($8,000 less $4,800 depreciation, less $500 hull deductible).

Insurance company B provides replacement cost coverage until the stern drive is 10 years of age. They will pay $7500 ($8000 less the $500 hull deductible).

Example 3 is a boat with a $500 hull deductible that suffers wind damage to the fly bridge enclosure. The fly bridge enclosure is 2 years old and the replacement cost is $5000.

Insurance company A provides replacement cost until the fly bridge enclosure is three years old. They will pay $4,500 ($5,000 less the $500 hull deductible).

Insurance company B provides replacement cost but specifically names canvas as a depreciated item. Insurance company B will apply 20 percent depreciation to the replacement cost. They will pay $3,500 ($5000 replacement cost, less $1,000 depreciation, less the $500 hull deductible).

There are other items to consider. For example, if the stern drive has to be replaced, most companies will apply a reduced depreciation if you agree to a remanufactured stern drive. This can save thousands of dollars in depreciation. We represent one insurance company that applies no depreciation for a remanufactured unit. Also, depreciation is only applied to parts (real property). Depreciation is not applied to labor, storage charges and other non real property items.

In the case of a Total Loss, please review this article  Yacht Boat Insurance and the Total Loss

We know boats..let us find the best policy for you..We will shop and compare coverage

Call 239-265-9577 or Email Info@SWFLAgency.com       www.SWFLAgency.com

 

 

Posted 3:00 AM

Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015

  • home insurance(9)
  • medicare(5)
  • swfl insurance(5)
  • homeowners insurance(4)
  • medicare insurance(3)
  • medicare plans(3)
  • health insurance(3)
  • life insurance(2)
  • open enrollment(2)
  • catastrophe risk management(1)
  • medicare supplements(1)
  • swfl insuarance(1)
  • wind mitigation(1)
  • hurricanes(1)
  • rate increases(1)
  • expanded tax credit(1)
  • florida blue(1)
  • pet insurance(1)
  • tropical storms(1)
  • property insurance(1)
  • condominium insurance(1)
  • medicare advantage plan(1)
  • flood insurance(1)
  • insurance(1)
  • boat insurance(1)

View Mobile Version

Get In Touch!
1-800-829-5270

Contact Us
Facebook LinkedIn Twitter Google Posts Instagram Icon

Resources

  • Get A Quote
  • About
  • Refer
  • Our Carriers
  • Blog

Contact Us

Fort Myers
8595 College Parkway, Suite 160
Fort Myers, FL 33919

P: 239-489-1212
Naples
2500 Tamiami Trail North, Suite 113
Naples, FL 34103

P: 239-649-4442
Port Charlotte
3718 Tamiami Trail, Suite C
Port Charlotte, FL 33952

P: 941-624-3444
© Copyright 2021. All rights reserved. | Powered by Insurance Website Builder