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Agreed Value vs Replacement Cost

Old 06-11-2021, 07:01 AM
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Default Agreed Value vs Replacement Cost

As we all know the boat market has gone pretty nuts.

When I originally insured my boat 3-4 years ago I did an agreed value policy, which took some haggling with State Farm as they were going solely based of NADA which was a little lower than what I could sell for. However, now my agreed value is way lower than what the boat would sell for. I am wondering what the downsides are to switching to replacement value right now. I am assuming it will be an uphill battle if I switched, and then something happened, but is anyone else considering this? Good/bad idea?
Old 06-11-2021, 07:09 AM
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I had to increase my house coverage by 200k and needed an appraisal. I'm not sure how boat insurance would do this, but I'm hoping to tag along and find out. I think everyone needs to consider looking at there home policies now too. I'm not sure why insurance companies aren't upselling this to their current customers?
Old 06-11-2021, 07:21 AM
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I would be extremely shocked if they didnt let you adjust your agreed value limit.
Old 06-11-2021, 07:31 AM
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Default For What It's Worth

Originally Posted by DCarwile View Post
I had to increase my house coverage by 200k and needed an appraisal. I'm not sure how boat insurance would do this, but I'm hoping to tag along and find out. I think everyone needs to consider looking at there home policies now too. I'm not sure why insurance companies aren't upselling this to their current customers?
You guys are thinking correctly: the market values are going up and most folks are always upgrading or maintaining things.
  • We have a full replacement value yacht policy with Amica Mutual.
  • We have the same surveyor who did the original pre-purchase condition and value survey do an in-water update survey each year.
  • This documents value increases due to upgrades and maintenance and market changes.
  • The replacement value on this particular boat has increased by about 30% in the past two years.
  • We send the survey updates off to Amica, and their underwriters increase the policy limits. They have never not followed the surveyor conclusions.

Last edited by LKD; 06-11-2021 at 08:12 AM.
Old 06-11-2021, 07:40 AM
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Good luck getting State Farm to increase the coverage. You will probably not get replacement cost on the boat. Replacement cost is for replacing the boat with a new boat if its totaled. Stated value is getting the amount stated on the policy if its a total loss. You might get them to increase the stated value but probably not replacement cost. The thing most people neglect to check is how they will cover a partial loss. Many policies us depreciation but you want a policy that gives actual cost to fix with depreciation.
Old 06-11-2021, 08:29 AM
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I have gone through this after Harvey. My boat appraised for $15K over what I paid for it (and with improvements/reconditioning I did), and I insured it for that amount. This was an "Agreed Value" policy. When the boat was totaled by the adjuster, (it didn't sink but sustained major fiberglass and water damage) he tried to offer me much less than the amount agreed. This was a huge slap in my face. Even though I had been paying for what I believed to be an "Agreed Value" policy, I had to prove that it was worth that much to receive what I wanted. I provided comps of boats identical (or close) to mine and what sales/asking price was. To make an ugly and frustrating story short, I was able to get pretty close to what I had insured it for.

This may sound like cynicism, but insurance companies have so many "pocket" ways of getting you less money in the event of a loss. Our home, while not sustaining too much damage, did get hit. My dock was a total loss (costing $70000 to replace), which is NOT covered by any insurance, this I knew, but the roof (tile), and doors and a couple windows ended up being way more than they expected. After all the haggling, including my 2% deductible (magically my home was worth $100000 more, this is way before crazy home prices and within 2 years of purchasing), I received less than $1600 for $35000 real world cost, damages. (another game they play, telling you can get $10000 worth of repairs done for $6000.....)

Insurance companies are in the business to make money, and I'm afraid they do just that at the expense sometimes of its policy holders. I now have reviewed all my policies and have it as iron clad as I can. All I can advise you to do, is sit down with your agent and hammer out all the details and ask specific questions, "what if....." and hopefully you will get the coverage you are paying for. Hopefully, you will never have to pull that spare tire out of the trunk.

As an afterthought, make sure your policy has environmental coverage as well. My boat didn't sink or have oil or fuel leaking, but my neighbors did sink, right into my dock and helped damage my boat, was leaking full tanks of fuel. One sunny morning I had a knock at the door by the Coast Guard and asked if I was aware that my sunken boat (since it was technically on my property) was leaking fuel and they were going to start fining me! I explained it was not my boat. My neighbor had the boat removed in 2 days, LOL
Old 06-11-2021, 10:26 AM
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Replacement cost on my boat now would be 12k a year. No choice but the take on some liability and go with agreed value.
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Old 06-12-2021, 11:05 AM
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You all need to get your terminology straight. :>)
Agreed Value - You and the underwriter agree on the boat's value. In the event of a total loss you get that amount.
Actual Cash Value (ACV) - You insure for whatever you want to. Pay premiums on that amount. In the event of a total loss you get that amount OR the current fair market value of the boat, whichever is LESS.
Replacement Cost - The cost of a NEW identical boat. This is not what it would cost to buy another boat just like yours.

Old 06-12-2021, 03:55 PM
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Steve, you are absolutely right! But terminology may be wrong...
Old 06-12-2021, 04:00 PM
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I think what you're looking at is agreed value. If the boats are going for that amount it shouldn't be too hard to get. You may need a survey/appraisal. Your premium will increase. When I went to State Farm it was pretty easy to say this is how much I want and the premium was based on that.
Old 06-12-2021, 04:03 PM
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I recently tried to get State Farm to let me pay a higher premium based on agreed value for my truck and they said they don't do that. Wondering if that's just my local agent or State Farm in general?
Old 06-12-2021, 04:48 PM
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I've had the same marine insurance company, Amica Mutual, for 45 years.
I believe that most companies separate marine coverage into two classes: boat policies and yacht policies.
The insurance carrier requires a condition and value survey by an accredited surveyor and may require periodic updates to that survey.
The carrier's underwriters set a value on the vessel on the basis of the survey and market value data, including BUC valuations. That valuation sets the upper limit of coverage.

Amica has no agents; it sells and services policies directly and offers this explanation:
  • Generally, the difference between a boat policy and a yacht policy is determined by the size of the boat. Boat policies cover boats less than 24 feet long, and yacht policies cover boats 24 feet long or more. Exceptions may apply.
  • If you have a yacht policy, damage is calculated on a replacement cost​ basis, with the exception of certain items specified in your policy. Replacement cost: Total cost to repair or replace an insured item., subject to a deductible amount specified in the policy.
  • For a boat policy, damage is calculated on an actual cash value basis, with appropriate depreciation applied to the items being repaired.
  • Coverage for your personal belongings depends on the type of policy. For yacht policies, your belongings are covered subject to certain limitations and a special deductible. Boat policies generally don’t provide this coverage, but you can add coverage with an endorsement. We can work with you to find the coverage that best suits your needs and budget.
I have found that Amica offers premium discounts for diesel engines, training and licensing, automatic fire extinguishing systems, automatic payment plans. and electronic servicing

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