An owner who suffers a total loss on his yacht suffers not only an emotional loss but also a huge financial loss. It is all the more annoying when he then finds out that his insurance only covers part of the damage. To prevent yacht insurance from becoming an incalculable poker game, here are some tips and explanations on what an owner should pay attention to in order to be on the safe side in the event of a claim.
Market value, current value, fixed valuation Even the terminology can quickly throw ship owners into a tailspin. The search for a suitable yacht insurance policy is correspondingly difficult. Often, it is only in the event of a loss that the owner finds out whether he has made the right choice. If you want to know exactly what you will receive from your insurance company in the event of a total loss, you should opt for coverage with a fixed value. This means that in the event of a loss, the insured value as stated in the policy will be reimbursed without deductions.
Not every fixed cab is a really fixed cab Unfortunately, not every agreed estimate is actually fixed and incontestable. The law does provide for the agreement of a valuation, but only as long as the agreed valuation does not significantly exceed the current value at the time of the insured event. This is normally the case for more than ten percent. In these cases, the policyholder only receives the current value of his yacht, despite the supposedly fixed valuation.
The estimate is only really "fixed" if it is formulated as new value insurance. Accordingly, the owner must take a close look at how the insurance cover is set out in the terms and conditions. Because some providers advertise with a fixed value, but behind it is a hidden current value insurance.
Time value insurance: Often cheaper but more complicated The current value reflects the new value of a yacht minus the reduction in value due to age and wear and tear. Only in the case of a total loss is it determined what the ship was actually still worth, i.e. the total loss in value since the beginning of the insurance is deducted. Here, disputes are actually pre-programmed. After all, once a ship has sunk or burned down, its original condition can hardly be objectively assessed. So for the policyholder, current value insurance is always a kind of gamble, because he never knows exactly what he will get in the end.
Premium remains the same while the insurance value decreases Another disadvantage: Although the insurance value continues to decline over time, the premium remains the same. The owner therefore has the same costs despite declining benefits. In the case of a fixed-rate policy, the premium also remains the same, but the benefits, i.e. the insured value, do not change during the entire term. But how do you actually determine the insured value? It is a misconception that the market value or the purchase price can simply be used as a basis. After all, the market value is determined by factors such as the overall economic situation as well as supply and demand: influencing factors which, however, are not exclusively decisive for the insured value. Just because a ship is not currently fetching an adequate price on the market does not mean that it is worth less. Pantaenius, for example, has one of the most comprehensive and accurate ship databases in the world. There is hardly a type of ship that is not recorded here. Accordingly, a valuation can be made here with great precision. Insurance companies, for whom the yacht sector is only a small secondary market, have a clear disadvantage here. After a total loss, a new and equivalent ship should be financeable by the insurance payment!