constructive total loss and insurers

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niccapotamus

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Hi

I'm trying to lay the groundwork for our possible insurance outcomes next week. Our insured value is £16,000 and the repair bill will be over the insured value to do the work properly - but there may be some issue about improvement as it will involve toe-rail replacement so the insurers may try to reduce the work total a little.

Does anyone have experience of the % value of quotes at which the insurers decide to go down the route of a constructive total loss (i have seen 80% mentione), and how much they are likely to want for the wreck (30 foot 1980's vintage boat in good nick - other than the damage - old engine).

We have to try to decide whether to compromise the work to get the repairs done for less, go for a constructive loss, and buy the wreck to try to get it repaired for a sensible value, or take the hit and move on........We have put a lot of time and work into her and she is close to being sorted, so it would be hard to walk away.......but I also need to put "mr sensible" head on...

just trying to get my head around it and talk to "the boss" this weekend as the quotes are likely to arrive properly typed up next week.....

many thanks
 
A constructive total loss is usually based on Market value and the sum insured only comes into the equation if it is lower than the market value as a limit. What is the market value of the boat?
 
niccapotamus said:
about the same as the insured value (probably) - or maybe less depending on the state of the used boat market for old boats
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Unless you have an agreed value policy ( not very likely) you need to establish the market value of your boat and if it is below the sum insured I am afraid that is what Insurers will work to. We all know that the second hand boat market is poor at the moment so you need to have a good case ready to argue.
 
You need to read the small print in your policy to see whether it is for market value or insured value.

You will probably end up negotiating a settlement and you may choose to keep the boat as part of that. Much will depend on your assessment of whether you want the hassle of carrying out (or supervising) the repairs or whether you would prefer to just take a settlement and leave the insurer to dispose of the boat.

There can be benefits in either route but there are no hard and fast rules. Obviously the insurer will seek to minimise his payment, and would probably prefer not to be lumbered with the salvage. on the other hand, given the vast choice of well priced boats on the market you might prefer to walk away with the cash (even if it is a bit less than you would like) and buy another boat.

Best to wait for the quotes, see what is involved in the repairs and whether you can tackle the job effectively, bearing in mind that you may be without a boat for some time and will end up with a repaired, previously damaged boat.

However, a bit like car insurance with older lower value cars, there is always a risk with low value boats that insurance will never cover all your losses.
 
it's an agreed value policy :) - well I have an "insured" value that the claim relates to and not "market" value so I do know where the limit is on the policy.
 
It will only be an agreed value policy only if it uses those actual words and usually means that you have had to produce evidence of the value at the time of taking out the insurance. Insured value usually means just that that is the limit rather than the amount they will pay. You need to check with the insurer or read the policy document.
 
As I understand position having spoken to my insurers if commercially the repair costs exceed the AGREED value in an AGREED value policy then they would pay out 100% on the value insured .If the vessel has a residue value and you are intersted in purchasing the vessel then they may offer a slightly lower amount with you to maintain ownership and repair as a project.
This often is a better value as it gives you a nice bag of fresh smelling crisp notes to waive at the repairer who may quickly revise his repair costs !
If you have a MARKET value policy then down to the insurer to offer what they or any appointed surveyor(if they undertook a surveyor to act) THINKS the boat would have been valued immediately prior to the incident as if about to be sold coupled with values from internet always a dodgy card as no Parkers second hand book for boats unlike cars!
Check you have an agreed value policy it should be clear in the wording as to how claims are settled. If market value get as much paperwork together such as work carried out serving etc even photos.
Out of interest are you in a position to name insurer to see if others have encountered before and hopefully give reassurance?
 
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.
 
Hello PVB
I would agree with you.I found out the hard way the sum insured is how I also used to read but no in the little print the weasel-worded use market value as a defence to paying out. .
The tight arsed insurance Co even put the surveyor on the spot by asking him for a value upon him surveying a pile of ash
He did not have an idea,nor would he.
Only buy a policy that is clear on Agreed value.
The Financial Ombudsman has many reports on the web for public reading .Bottom line they do not appear to like this market value cop out .
So ask the insurer how do they settle claims before you buy the policy and also be wary if the insurer appoints a loss adjuster against a surveyor .
A loss adjuster is that to screw you.
 
pvb said:
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.
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Me too. I've always had agreed value insurance. Just checked the wording from Pantaenius and it uses the term Agreed Fixed Value.
 
Y Insurance use the term "insured value". No suggestion that total loss will be limited to market value.

However, if you are claiming against a third party or their insurer then that insurer will almost certainly base their settlement of market value - that is their liability to you is to put you back in the position you were before their insured damaged your boat. Your insurer's liability is as defined in your contract. That is why it is sometimes better to claim from your own insurer rather than the third party and let your insurer recover their loss.
 
Sorry to say it, but unless the policy is stated as being on an agreed value the maximum amount payable is the market value of the boat at the time of the loss, limited to the sum insured if that is lower. Otherwise what you are saying is that you could insure your 21 foot boat for a million pounds and expect to be paid that if you had a total loss.
 
mainsail1 said:
Sorry to say it, but unless the policy is stated as being on an agreed value the maximum amount payable is the market value of the boat at the time of the loss, limited to the sum insured if that is lower. Otherwise what you are saying is that you could insure your 21 foot boat for a million pounds and expect to be paid that if you had a total loss.
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It is not as simple as that. An insurer would not allow you to do that. They know what a reasonable value is, and may well ask for a survey and valuation before agreeing to an insured amount. If you lied about value the policy could be voided.

I think that the insurer would have to actually state that payment would be limited to market value in the event of a total loss, just as they often limit payment on specific items such as betterment on semi consumables such as sails or in the case of outboards on my policy which specifically states the lower of market value or the sum shown on the insurance certificate.

If I remember I will ask Barry Sullivan on Monday for clarification.
 
mainsail1 said:
Sorry to say it, but unless the policy is stated as being on an agreed value the maximum amount payable is the market value of the boat at the time of the loss, limited to the sum insured if that is lower. Otherwise what you are saying is that you could insure your 21 foot boat for a million pounds and expect to be paid that if you had a total loss.
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Can you give a link to an insurance policy which actually states this?
 
I have just renewed with Bishop Skinner this week and they sent me a new policy document which supports what I have said. Incidentally I worked in insurance claims for most of my life before retirement.
 
lpdsn said:
Me too. I've always had agreed value insurance. Just checked the wording from Pantaenius and it uses the term Agreed Fixed Value.
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Nope. I had this argument with Towergate, who wanted me to declare a value and insure for that value, but would not insure against that value. So I took my business to Barrie at Y Yacht Insurance, who do provide an agreed value policy.
 
mainsail1 said:
I have just renewed with Bishop Skinner this week and they sent me a new policy document which supports what I have said. Incidentally I worked in insurance claims for most of my life before retirement.
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But the Bishop Skinner policy allows for payment of the Agreed Value, rather than their idea of the Market Value, although they'd presumably charge you a bit more for this option (endorsement P). I wouldn't contemplate having yacht insurance which didn't pay out an agreed value.
 
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