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What happens if the boat is underinsured?
Short answer
Underinsurance does not only hit a total loss.
It reduces every partial loss in the same proportion by which the sum is too low.
Underinsurance is the mistake that hides longest. It arises when the agreed sum insured is below the actual value, because the boat has risen in value since inception or because the figure was estimated rather than worked out. It surfaces in a claim, and not only in a total loss.
The decisive point is often misunderstood. Underinsurance does not merely cap the indemnity on a total loss; it reduces every partial loss proportionally. If the boat is insured for eighty per cent of its value, a 10,000 euro repair is indemnified at eighty per cent. The reduction therefore hits everyday claims, not the exceptional case.
An agreed value is the remedy: where a value is fixed between the parties it governs, and the defence of underinsurance is excluded. That is why an agreed value is more than a comfort feature. Check once a year whether value-adding refits have been done, because a new rig, a new engine or new electronics move the figure by a five-figure amount very quickly.
Worth remembering
Not only
the total loss is affected
Every partial loss
is cut in the same proportion
Insure 60,000 where 100,000 belongs, and a 10,000 claim pays 6,000. A scratch is treated no differently.
Questions
What owners ask us about this
How do I find the right value?
Start from purchase price and year, then add refits and equipment. On larger boats, and whenever you are unsure, a valuation is the safest route.
What if I insure for too much?
A sum that is clearly too high costs premium you do not need. From Basis Plus the agreed sum counts as an agreed value. Check the value regularly all the same, so that premium and value match.
Agreed value or current value: what is paid on a total loss?
From Basis Plus the agreed value, the amount fixed when the policy started. In Basis Plus, for boats over five years old, only while the current value still reaches half the sum insured and replacement is proven; in Premium without an age limit. In Basis the current value is paid, with an age deduction after three years. That is why the sum has to be right from the start.
Related
Not sure whether you qualify?
Whether it is “What happens if the boat is underinsured?” or another question: send us your residence and the flag your boat flies. You will get a straight answer in one email; including a no, if that is the answer.
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