constructive total loss and insurers

[Birdseye]

I'm surprised by this thread, as I'd always assumed that boat insurance was based on a "Sum Insured", and that if the boat were to be destroyed, this is what the insurer would pay out - not some weasle-worded "market value". A quick look at the wording of several popular insurers' policies suggests that the "Sum Insured" basis is the one usually used.

If insurers were to operate as you imply, it would be an open invitation to yet more insurance fraud. People would buy a £5k boat, insure it for £50k at a cost of £250 and then find a way of sinking it.

The "sum insured" bit is a way of saying to you, "give us your best guess as to its value". because no one wants the reverse situation, the £50k boat insured for £35k . What happens then if the boat sinks?

The alternative is agreed value insurance but that requires that you spend some money on an independent valuation. Given that total losses are very rare, people arent keen on doing so.

 

[Tranona]

If insurers were to operate as you imply, it would be an open invitation to yet more insurance fraud. People would buy a £5k boat, insure it for £50k at a cost of £250 and then find a way of sinking it.

The "sum insured" bit is a way of saying to you, "give us your best guess as to its value". because no one wants the reverse situation, the £50k boat insured for £35k . What happens then if the boat sinks?

The alternative is agreed value insurance but that requires that you spend some money on an independent valuation. Given that total losses are very rare, people arent keen on doing so.

But that does not happen - and if it did it would be fraud. Insurers have a pretty good idea of values of boats, and if they are unsure will ask for evidence to support the insured value before they accept it. There is an overriding condition in insurance that statements made on an application are true - so if you lie the insurer can reject your claim. Equally they can reject a claim if they can show it was not an accident, but deliberate sinking. They employ fraud investigators to guard themselves against just such events.

 

[Birdie]

I think you should check your policy wordings very carefully. Working in the insurance industry most of my life, motor, home and travel, I cannot imagine that any insurance company will simply pay out what you told them was the 'value' of your boat.

If it really is an agreed value, i.e. what the insurance company have agreed to pay you in the event of a total loss, I'm pretty sure that you would have to provide evidence at the outset or when you make a claim to back up the figure otherwise there is nothing to stop everyone insuring exaggerated amounts, and I'm fairly sure the Underwriters have thought of that one.

 

[niccapotamus]

have talked to insurers and checked policy. our pay out will be the insured value if she is a total loss which isn't certain yet....kind of depends if we can take compromises in the repairs........

I suspect that there is, as said before, a point about an accurate declaration when insuring, so if insured value is inflated then they can get you that way....and the insurers have a reasonable idea of values