The bank wants an assignment

Short answer

The bank asks for a written confirmation that it receives the indemnity in a claim; we need the bank and the loan reference, ideally with the proposal.

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The document the bank asks for is a confirmation that it receives the indemnity in the event of a claim. Banks require it as a matter of routine on a boat loan and on a lease, and they usually require it before the money moves. It is therefore not a piece of paper for later but one for the proposal.

So tell us the bank and the loan reference straight away if the boat is financed. Then the confirmation goes out with the contract and the drawdown does not hang on a request in the week before handover.

The consequence is rarely spelled out in the loan documents: on a total loss the indemnity goes to the bank up to the amount outstanding. That is why the sum insured matters most on a financed boat. If it is below the replacement value, an outstanding balance is left with you after a total loss even though the insurer has paid.

So set the sum insured at a realistic replacement value and work with an agreed value: at the higher level of cover it holds for five years and then reduces on a scale, at the top level without a time limit. That removes the deduction for age, which weighs heaviest on a ten-year-old boat, and it is precisely that deduction which opens the gap to the outstanding balance.

Where a boat is owned jointly, the reference to the bank belongs in the joint owners’ authority, otherwise there is no basis to issue the confirmation at all. And if you are planning to charter the financed boat out, the commercial use has to be in the contract: it is a different calculation and not something that insures itself quietly.

Worth remembering

If the sum insured is too low, nothing is left after a total loss and the instalments carry on.

What is the document the bank wants?

A confirmation to the financing bank that it receives the indemnity in a claim. Banks require it as a matter of routine on a loan or a lease.

What do you need from me?

The bank and the loan reference. Give us both with the proposal and the confirmation goes out with the contract.

Who receives the money on a total loss?

The bank, up to the amount outstanding. Anything above that goes to you.

How do I avoid an outstanding balance after a total loss?

Set the sum insured at the replacement value and work with an agreed value: five years at the higher level of cover, without a time limit at the top level, which removes the deduction for age.

What applies to joint ownership?

The reference to the bank belongs in the joint owners’ authority, otherwise there is no basis for issuing the confirmation.

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