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.

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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.

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?

You pay premium for nothing: the indemnity is capped at the actual loss. Over-insurance never pays.

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