How does an Insurance company determine depreciation?

mnm99

mnm99

Well-Known Member
Oct 2, 2015
2,447
Long Island
Boat Info
2004 340 SeaRay Sundancer
Engines
Twin 8.1 Merc
I had a claim last week and they depreciated my transmission 75%. The boat is a 2004 with 500 hrs. I ended up getting $950 for a $3800 transmission! I was told from the Survey guy that the life of a ZF-63 IV transmission is 20 years. The boat is 17 years old he said. The insurance company said the first 10 years are considered new with 100% replacement then goes down from there. So thats 7 years of depreciation. I spoke to 3 transmission places and he said they can last a lot longer then 20 years. When the adjuster told me what it was she told me he said this. I guess whatever the survey guy says goes! I called the office and they are calling me back. I think I should at least get 50%. Well see. If not I guess I only have a couple years left on my other tranny. Yea right...
 
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It’s def screwed up, but one thing to be aware of, they do not depreciate labor, that is still at 100%. Iirc, the lowest my insurance depreciates is 80%…. There is no physical schedule that I can find, they all do it. If the boat is a title loss (sinks) there is no depreciation….

mnm99 said:
I had a claim last week and they depreciated my transmission 75%. The boat is a 2004 with 500 hrs. I ended up getting $950 for a $3800 transmission! I was told from the Survey guy that the live of a ZF-63 IV transmission is 20 years. The boat is 17 years old he said. The insurance company said the first 10 years are considered new with 100% replacement then goes down from there. So thats 7 years of depreciation. I spoke to 3 transmission places and he said they can last a lot longer then 20 years. When the adjuster told me what it was she told me he said this. I guess whatever the survey guy says goes! I called the office and they are calling me back. I think I should at least get 50%. Well see. If not I guess I only have a couple years left on my other tranny. Yea right...
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mnm99 said:
I had a claim last week and they depreciated my transmission 75%. The boat is a 2004 with 500 hrs. I ended up getting $950 for a $3800 transmission! I was told from the Survey guy that the life of a ZF-63 IV transmission is 20 years. The boat is 17 years old he said. The insurance company said the first 10 years are considered new with 100% replacement then goes down from there. So thats 7 years of depreciation. I spoke to 3 transmission places and he said they can last a lot longer then 20 years. When the adjuster told me what it was she told me he said this. I guess whatever the survey guy says goes! I called the office and they are calling me back. I think I should at least get 50%. Well see. If not I guess I only have a couple years left on my other tranny. Yea right...
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Don't confuse actual useful life with a depreciation useful life. Good luck with your claim.
 
Golfman25 said:
Don't confuse actual useful life with a depreciation useful life. Good luck with your claim.
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Can you explain? If my boat was 250K new and BB value is 125K now that's 50%. Sorry I just don't know what the difference is that your explaining. Thanks
 
Chris-380 said:
It’s def screwed up, but one thing to be aware of, they do not depreciate labor, that is still at 100%. Iirc, the lowest my insurance depreciates is 80%…. There is no physical schedule that I can find, they all do it. If the boat is a title loss (sinks) there is no depreciation….
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What's the company your using? IIRC?
 
Don't accept the insurance adjustors offer. When they press you, just calmly explain that you don't consider their offer reasonable or fail. The adjusters job is to not to pay you more than he has to or can get by with.

Get a qualified marine surveyor/mechanic that does transmission work and build a case for a different and more correct useful life. There are a lot of data points available here on CSR.

The $950 offer is not even enough to by a rebuild kit for a ZF- 63-IV. As a negotiating strategy tell the adjuster you are just going to have the gear rebuilt and will expect full coverage on the rebuilt unit.
 
Is your policy Agreed Value or Actual Cash Value? Sounds like Actual Cash Value policy that can be subject to depreciation.
 
Adjusters are typically contractors hired by an insurance company based on feedback from other insurance companies so their “adjustment” is bias.

remediation can be difficult but usually they will cave with a summons.
 
mnm99 said:
Can you explain? If my boat was 250K new and BB value is 125K now that's 50%. Sorry I just don't know what the difference is that your explaining. Thanks
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Depreciation is an accounting fiction. It's how bean counters reduce values and allocate costs. And to do so they pick a "useful life" which rarely resembles the actual life.

In your example, your using the value identified by a book -- it's a guide. If your boat was 250k new, the BB value is 125k, but you actually sell it for 140k -- one is real depreciation (250-140) and one is accounting depreciation (250-125).


Saying a transmission has a useful life of 20 years is completely made up. We know that because there are a bunch of transmissions still working fine that are well over 20 years old. It's frustrating for the boat owner when dealing with an insurance claim because there can be a lot of useful life left in an older transmission. But the insurance company has to protect themselves and so they use accounting depreciation as a way to do that. I like Frank's idea of using repair/rebuild costs. Good luck.
 
I think its bullsnot. Not you, them, that whole depreciation thing. We had a bad house fire in 2014. Took almost a year before we moved back in. The was no depreciation on components like stove fridge whatever, they just replaced new. Should be the same with your boat. Pisses me off the games they play.
 
Pirate Lady said:
I think its bullsnot. Not you, them, that whole depreciation thing. We had a bad house fire in 2014. Took almost a year before we moved back in. The was no depreciation on components like stove fridge whatever, they just replaced new. Should be the same with your boat. Pisses me off the games they play.
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Yea I just called them again and they didn't budge. Said it was industry standard. I did however find my receipt for the flex plate I installed 3 years ago. They should cover that 100%. That should help out a little.
 
Pirate Lady said:
I think its bullsnot. Not you, them, that whole depreciation thing. We had a bad house fire in 2014. Took almost a year before we moved back in. The was no depreciation on components like stove fridge whatever, they just replaced new. Should be the same with your boat. Pisses me off the games they play.
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It's the type of policy you buy. Homeowners is generally (and probably thru state regulation) replacement coverage -- so they replace everything with new stuff. Boats not so much. I think there was a discussion earlier on getting a replacement cost policy for boats.
 
Golf, thanks, this evening i am going to look at my policy and if i dont get it, i will take to someone who does. My policy is Agreed Hull Value. So i am insured for the cost i paid for the boat. (which maybe i should up after all the upgrades) but maybe thats only if it sinks to the depths and not components.
 
Pirate Lady said:
Golf, thanks, this evening i am going to look at my policy and if i dont get it, i will take to someone who does. My policy is Agreed Hull Value. So i am insured for the cost i paid for the boat. (which maybe i should up after all the upgrades) but maybe thats only if it sinks to the depths and not components.
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I also have the agreed value. If it sinks I get it all. It's the replacement parts value that's the problem. I'm going to look into other policies now. Sent a email to CHUBB. We'll see..
 
mnm99 said:
I also have the agreed value. If it sinks I get it all. It's the replacement parts value that's the problem. I'm going to look into other policies now. Sent a email to CHUBB. We'll see..
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Chubb is the same, I read a thread in the winter on here, same issue and called and went through it with them
 
I think you'll find most/all proper yacht policies are the same, or very similar, in their parts coverage language. I think you'll also find that almost none of us know about the depreciation language in our policies until after a substantial claim :)
 
My wife worked long time for insurance company in the subrogation dept. thats where you get on a car wreck, your insurance company pays you then they go after the fault party’s insurance company to re collect. Lots of legal stuff. And this boat insurance gives her a head ache reading it. Admiralty law going back to 1600’s. Boats are different. Do you know if you on a cruise ship and it sinks and you drown they are only liable for the value of your personal belongings that you had on board? Admiralty law. Cant make this up.
 
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