Market value or agreed value, what is paid out in a total loss

Where cover is on a market value basis, the settlement falls as the boat gets older.

With an agreed value the insurer pays the sum agreed, whatever the age.

Depending on the make, how well it has been looked after and the state of the market, a boat loses roughly five to seven per cent of its value a year. After eight years that comes to around forty per cent, which on a boat bought for eighty thousand euros is a difference of more than thirty thousand euros. That is precisely the sum that is missing in a total loss if the policy pays only the market value.

That is why the line about the insured value is the most important one in the whole policy. Market value means: the price when new, less deductions for age, wear and use, and the figure is only assessed once there is a claim. Agreed value means: the sum insured agreed in the policy is the value, and the insurer cannot argue afterwards that the boat was under-insured.

Many insurers grant the agreed value only in their higher tariffs, and often only for a limited number of years, after which a sliding-scale deduction applies. Basic tariffs frequently do not include it at all. That does not mean the sum never has to be adjusted: after major work on the boat or a marked rise in market value it is worth letting us know. But it does mean that your boat is not quietly insured for less with every year that passes.

The agreed value still has a limit, and it is not in the policy but in the law: under section 76 VVG (the German Insurance Contract Act) an agreed value counts as the insured value only so far as it does not 'substantially exceed' that value. Where 'substantially' begins, the law does not say; in the case law the line has sometimes been drawn at around ten per cent. In practice that means an agreed value protects you against the deduction for age, but not against a sum set too high. Insure your boat for 120,000 euros when it is only worth 80,000, and you pay premium on 120,000 and still face an argument about the value when you come to claim.

Our advice is therefore the less comfortable one: set the sum at the realistic replacement value, not at the value you would like the boat to have, and tell us when it needs to go up after a refit or other major work. An agreed value that is kept up to date is stronger than a high one. So check your own policy to see whether the wording really says the agreed value is paid without a deduction for age; the term on its own guarantees nothing.

Worked out for your type of boat

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