We're all familiar with the terms 'new-for old' and 'market value' when it comes to our normal insurance products, like home and contents. Do they still apply in the world of boat insurance and if so, which one will work best for you?
The short answer is no, they don't.
Boats are different
The boat market is a smaller than many others and the number and type of craft is huge, from yachts and cruisers to dinghies, canoes and kayaks, let alone things like jet skis and windsurfers. With new models coming out every year that means there is a massive variety of type, make and model, but not the numbers to make trends in prices reliable, as is the case with cars or houses.
So the options available to boat owners are slightly different, and in this article we'll explain what they mean so that you can choose the best one for you and your boat.
Terminology and jargon
Let's take a quick look at some of these terms and what they stand for before looking specifically at boat insurance.
Market value - if something happens to your boat that means it has to be replaced, your insurance company will award you the amount that they think it has on the secondhand market - i.e. it's market value. So if you bought your boat new for £25,000 five years ago and it's worth £18,000 secondhand, you'll receive £18,000 (minus any excess) to enable you to buy a similar boat, of a similar age, to the one being replaced.
New-for-old - this term is used a lot with insurance policies but NOT with boats. It means that you would receive the amount of money needed to buy a replacement (or its equivalent) no matter how old the item was. As pointed out earlier this is not a term generally used with boat insurance.
Agreed value - this is similar to new-for-old although it works with used boats, not just new ones. Let's say you've bought a boat for £15,000 and have the documentation to back that up. You can then insure it for £15,000 and that's what you'll be paid if it's written off, minus any excess and in some cases an amount that represents depreciation.
So this boils down to a straight choice for boat owners between agreed value and market value. So which one's the best?
Market value is the most popular choice and that reflects the longer lives that boats have compared to other consumer products like cars. It's common for boats to last for decades as long as they are looked after so if you've bought a fifteen-year-old boat then the depreciation will be all but done - the value is more likely to be based on features and condition.
So if it's written off five years later, buying a twenty-year-old boat will give you a suitable replacement - you're back where you were before it was written off. But that might not be the case with a new or nearly new craft.
It's when you splashed the cash that you want to protect your investment.
If you've bought a new or nearly-new boat and something happens to it, you'll want to be able to replace it with one similar in age and condition to the one you bought, even though some years may have passed. Of course, you'll pay for the privilege. Unless you can find a spectacular deal, agreed value insurance is always going to cost more than market value, for obvious reasons.
It's also very important to find out about any deductions from the agreed value. For example one policy pays two-thirds of the value of sails that are over three years old. Another deducts 10% per year from the value of an outboard motor, but only as far as 50%. Boring though it may be, reading the small print is essential before committing.
One of the huge benefits of using this site is to be able to see at a glance the difference that the valuation that we created the first ever instant boat insurance comparison site in the UK purely so that you can pick and choose the right policy for you and your boat.
Once you told us a bit about yourself and your boat you'll get a list of your quotes from all the UK's top boat insurance companies. You can then look at the details and select one's with the valuation type you're looking for - market or agreed.
This makes it quick and easy to look at the real price difference between the two types of valuations, allowing you to select the best policy for your needs.
In short then, new-for-old doesn't apply to boats, market value will enable you to buy an equivalent boat and agreed value will allow you to replace your boat exactly as it was when you bought it, as near as is possible.
Armed with this knowledge you can now use the boat insurance comparison application to compare your quotes, then pick the one that that's best for your boat and your situation.