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MotoGPTy

Insurance Claim - Depreciation

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MotoGPTy

Howdy all,

Got a call back from my Travelers insurance adjuster today for a recent claim after our boat found an old railroad box car or trestle out in the main channel. Several other boats have found the box cars / sunken bridge with the low water situation we have here in Charlotte but that's another story.

My question for the Crew is, has anyone ever been told by their insurance company that they will only pay a depreciated amount for the running gear (ie, prop, propshaft, strut, rudder, etc)? My shop says this is the first time they've ever even heard of this. Parts are parts, right? I just bought a new OJ 945 that they are not going to give me full amount on now...and how can a propshaft or rudder be worth any less when you have to replace them?

Anyone else out there have this experience with an insurance claim?

Thanks!

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robbennett

Bottom line is they have to be replaced with new parts. It should be cost to repair - your deductible period. They are trying to get out as cheap as possible.

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oldjeep

Never heard of that, and those are not wear parts anyways.

Now are they saying that they will only give you a check for the depreciated cost up front and then the total cost once you have proof of repair? That is the way my roofing claim worked on the house.

Also - have you got agreed value insurance or regular insurance that takes into account the present actual value of the boat?

In any event your policy should fully explain how claims are paid, I'd start reading.

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MotoGPTy

Policy reads:

Property subject to depreciation. We will pay no more than the actual cash value, at the time of loss or damage, to the following property:

....

(e) outdrive power units of your boat

(f) machinery, including inboard engins, running gear, and equipment, over ten years of age

Wouldn't "actual cash value" mean what it costs to buy these parts. Confusing language to me.

Edited by MotoGPTy

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dielawn

Yeah that doesnt sound right. You should have to pay your deductible and then the insurance pays the rest to have it repaired. It's not like the repair shop is going to install used parts on your boat...

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dielawn

Policy reads:

Property subject to depreciation. We will pay no more than the actual cash value, at the time of loss or damage, to the following property:

....

(e) outdrive power units of your boat

Wouldn't "actual cash value" mean what it costs to buy these parts. Confusing language to me.

I believe that depreciation value has to do with your ENTIRE BOAT. So if you were to total the boat, then they would only pay you for what a 2004 LSV with XXX hours on it would cost. That part makes sense, but not if were talking a few parts or a few thousand dollars in repair, they are to pay whatever the cost is to repair it after the deductible.

Scenario that just happened to me:

- 2 summers ago, I threw a rod in the engine, the entire engine had to be replaced. Paid the deductible, and the insurance company paid the remainder.

-1 Summer ago, garage burned down and boat with it. Insurance company paid for the entire depreciated value of the boat. ( I was then put on notice I have been dropped from their services :rockon: )

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oldjeep

Policy reads:

Property subject to depreciation. We will pay no more than the actual cash value, at the time of loss or damage, to the following property:

....

(e) outdrive power units of your boat

(f) machinery, including inboard engins, running gear, and equipment, over ten years of age

Wouldn't "actual cash value" mean what it costs to buy these parts. Confusing language to me.

Nope, actual cash value is depreciated value

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MotoGPTy

Just updated the policy quote above to include (f). The boat is a 2004 but not sure this matters?

Definition of "Actual Cash Value" in the policy states:

"actual cash value" means the replacement cost of the covered property at the time of the loss, less deduction for any depreciation.

I guess this is where they are coming from?

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oldjeep

Just updated the policy quote above to include (f). The boat is a 2004 but not sure this matters?

Definition of "Actual Cash Value" in the policy states:

"actual cash value" means the replacement cost of the covered property at the time of the loss, less deduction for any depreciation.

I guess this is where they are coming from?

Yup, you bought crappy insurance. Look into agreed value coverage and make sure that the policy doesn't include any language about actual cash value or depreciation in reference to any sub-assemblies like you listed above.

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RTS

Ask the adjuster to explain to you which depreciation method they are using to calculate the depreciated value of your busted up prop. MACRS? Straight line? What do they suggest is the life span of a propeller or a driveshaft on a boat? I would suggest it is infinite, unless you have an accident and bust it, which is what insurance is freaking for. If the expected life is infinite, your underwater gear has not depreciated one bit.

Ask them for tables or whatever other documentation they have with the expected life of a boat propeller. Certainly they are not going to guess.

Note to Self: Never buy Traveler's insurance.

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EchelonMike

You made me just read my insurance policy! :-)

Allstate policy says: "Repair Cost for Partial Losses - We will pay the actual cost to repair or replace the covered property with material of like kind and quality with no deduction for depreciation. This provision applies only to partial losses." The only thing they would pay actual cash value on (ie - after depreciation) is canvas and sails if you insure a sailboat.

Note to anyone with Travelers Insurance on the forum...go shopping!

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MotoGPTy

Thanks all!

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robbennett

Your OJ 948 is not 10 years old. Insist they replace that at full cost. The rest of the running gear you may be out of luck. I would still dispute the amount they give you if it is not at least very close to the repair amount.

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wakebrdr94

I have travelers, but have agreed value. Looks like I'll be reading tonight....but mine is new, so obviously the over 10 years old wouldn't apply. Still going to read

Edited by wakebrdr94

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REHinH20

Probably lots of us will be reading - everyone better take a moment to check their homeowners and auto policies! This is a common way the insurances get you that lower premium.

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Pnwrider

^^^ yup, have agreed value on the boats but have to check on all the other assets tonight.

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asnowman

A bunch of years ago, we had an encounter with some rocks in an I/O, prop and all gears in the outdriveout drive, and drive shaft needed replacement, it was a 19 year old boat. I was trying to just get it repaired, and was arguing with the insurance company over covering just replacement parts, and out of frustration, complained that I wasn't even trying to replace the entire oout drive, they adjuster told me that would be covered..... called the marina, and had a revised quote for a new out drive and prop faxed to the adjuster.

rather than 700 in parts, 2500 bucks for a new outdrive, go figure.

try talking to a different adjuster, or a supervisor.

definately show receipt for the prop, make them pay for that.

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tvano

keep in mind that you are in a negotiation

don't think that the first offer is the only option

start a conversation and keep it going

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wakebrdr94

Are you insured for actual cash value? Right under that in the policy it reads...

"Agreed Value" means the amount of insurance for your boat as shown on the declarations, without deduction for any for any depreciation.

Make sure you know which one you have

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Cory

I set my deductibles on the boat pretty high (i.e., a couple thousand), such that it has to be pretty bad before I even consider an insurance claim. I view my boat insurance more like catastrophic/theft insurance. For small stuff like hitting a stump, I just self-insure. We've hit two stumps over the course of 8 summers. The first cost $1,100 and the second cost $2,100. I'm not sure I've come out ahead yet or not. I assume had I made claims, my insurance premiums would have risen more than they have.

My general philosophy w.r.t. insurance is to only insure against the occurrence of events that, should they happen, would substantially change our standard of living. Otherwise, self-insure (i.e., save and make sure you have a safety net for stuff like this). My parents on the other hand fully believe in all forms of insurance and extended warranties.

Edited by Cory

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Afun

I always ask for replacement cost coverage. They usually go off the MSRP....but no need to insure for that bloated amount. Replacement coverage with a good company doesn't cost much more.

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DarkSide

^^^Yes, also BIA automatically gives upto 20% above during first 5 yeasts to help with annual price increases.

So effectively 120% of MSRP if you have a total loss within first 5 years

Edited by DarkSide

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RyanB

I had a homeowners claim with Travelers in June of 14 due to hail. I am just now finishing the process.

I hope your experience with the claim is better than mine. My policies renew in October, and I am moving away from them, even if it costs me more money.

Good luck.

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EchelonMike

A few other thoughts on this:

1. They should give you full replacement value of the prop since you just bought it.

2. I am sure there is an appraisal/arbitration process if both parties cannot agree. This depreciation clause in your policy appears to be speaking towards complex things like outdrives and outboard motor lower units. I can see where a 10 year old outdrive is not worth as much as a 1 year old outdrive. But a 1 year old propshaft vs a 10 year old propshaft? Hell, you can't even tell how old they are by looking at them. Same with a rudder, strut, tracking fin, or any other underwater gear on an inboard.

3. Are you "friends" with the repair dealer? Have them quote full MSRP for the replacement parts and be extremely "conservative" on the labor to do all the repair work. I assume insurance will write you a check based on the quote. If they do this, hopefully you can get close to the actual repair cost without a lot of out of pocket expense.

You can tell by the policy language this is not a consumer-friendly company - be prepared to fight with them.

Good luck, sorry you have to go through all of this.

-- Mike

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Bturner

I dealt with this a couple years back when I was reading an addendum to my Boat US policy that was sent mid term of the policy. At that time they made the change you are now dealing with. It's not that you have good or bad insurance, as most insurance companies are now pulling this weasel move. It's the new accepted way in the insurance industry of raising rates without changing your payment amount. In effect they're increasing your risk and still charging you the same amount.

The discussion I had with Boat US lead me to cancel my policy and go to Progressive. I will however tell you that Progressive also had the same "standard" deductible policy of depreciation but upgrading to what I considered normal and fair (as in how does a nibral prop that hasn't been dinged lose 30% of its value) for far less than Boat US was offering at the time. I was really ticked at Boat US for other reasons too as they had raised my rates 80% to cover their losses from the hurricane that hit NY and even had the balls to send me a letter stating that as the reason. But I digress.....

The point here is this is a new insurance industry standard for not paying full amount of claims that has run it's course but like in your case still is "catching fish". It's another item when shopping for insurance that you have to be aware of, weigh the value of and take into consideration when trying to do an "apples to apples" comparison of insurance policies (if you can really ever do that) when shopping for coverage.

It's a shame, while insurance has always been a game of chance there was a time when you could trust some companies to be more honest than others. I thought this way of Boat US but now they're no better than anyone else. I don't know, maybe a bit worse as they sell themselves as the friend of boaters. Maybe at one time but now..... not so much.

Edited by Bturner

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