How can an insurance company decide to pay less than the policy amount, even though a boat is totaled?

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How can an insurance company decide to pay less than the policy amount, even though a boat is totaled?

Boat Insurance. I am going to “small claims” court on Tuesday. Here is the story I bought a boat on Craigslist for $6000. The ‘seller’ said that I didn’t have to register the boat for 4 months because it was still registered. I now know that you have to register the boat when you make a purchase. Anyway a storm came through 2 months after my purchase and destroyed the boat. My insurance SkiSafe said that they didn’t have to pay because I didn’t have it registered. I contacted the registration place and they told me that registration or not had nothing to do with whether the company was liable or not. Then the insurance company said that it was only worth about $2500 and would pay that less the deductible. However, the repair appraisal was about $12,000. I do have all of my paperwork including the handwritten receipt. Do you have any advice for me in court? I am asking for the $6,000, plus the boat storage fee that the repair station is charging me for.

Asked on April 15, 2012 under Insurance Law, Tennessee

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Under the laws of all states in this country, the measure of damages with respect to a damaged item such as a car or boat is the lesser of the cost to repair of the item's fair market value at the time of the damage.

The $2,500 amount less deductible is what the insurance company that you have has valued your boat at the time of the damage which is well less than what you purchased it for. However, the $2,500 amount less the deductible is in accord with the current measure of damages under the laws of all states concerning your boat that was damaged completely. For insurance purposes, it is irrelevant that your insurance policy was well above the $2,500 amount.


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