Let me see if I follow this tale accurately:

1) You hit something. Whose fault was that?

2) Shop takes an external look at the unit, utilizes X-Ray vision to declare
"everything inside is screwed up", and asks for $5000.

3) Boat/US says, "Not so fast, we'll pay for a tear down to see if everything
inside is screwed up, or not."

4) Following tear down, the $5000 shop reduces the scope of work required and
its estimate to $2700.

5) You concede that your policy states that mechanical items can be
depreciated.
(Note: At one time this wasn't the case with a "yacht" policy. People would
lose an engine at 2500 hours and expect the insurance company to fork out five
figures for a new one. That's changed recently in many policies. If your boat
is a total loss, you're going to get the agreed upon hull value, but other
types of repairs, particularly mechanical, are more often depreciated)

6. Your real beef seems to be with the method of calculating depreciation. At
25%, you probably got off light. I've heard of other insurance companies going
for 40-50% on stuff that's not more than 1-2 years old.

BoatUS is one of the best insurance companies, IMO. They have been my insurer
for 12 or 13 years now. I'm glad my premiums don't reflect the cost of having
other policy holders "hit something" and
then walk away scot free.

In a year when there have been four hurricanes in the SE, nobody should expect
any insurance co. to be a fountain of generosity. This is a bad year for them,
and they will follow the policy language with a pretty hard nosed attitude.