Agreed Value or Actual Cash Value Boat Coverage?
Which one should you choose when you are buying boat insurance? Agreed value or actual cash value (ACV) coverage for your boat?
If your boat is a total loss, you’ll need to understand how your boat insurance will compensate you.
You’ll need to choose between agreed value and actual cash value coverage for your boat:
If you choose an agreed value policy, your boat insurance provider agrees to honour the value of the boat at the time your boat policy was written. For example, you buy a new boat for $50,000 and you insure it for that value. That is the amount you will receive if you have a total loss.
There is usually a time limit for agreed value coverage. A boat might have agreed value coverage until it’s a certain age, for example.
If you choose an actual cash value (ACV) policy on your boat insurance will pay you the replacement cost of the boat in the event of a loss.
Note that depreciation, damage, and wear and tear are factored into the actual cash value you will receive.
Let’s look at the positives and negatives of agreed value vs actual cash value boat coverage
Positives of agreed value coverage:
- An agreed value policy gives you peace of mind because the limit that is on your boat insurance policy is the amount that you are insured for after a total loss.
- Usually, the value that is agreed upon will be the purchase price of your boat.
- The only amount you pay is your deductible.
Negatives of agreed value coverage:
- An agreed value policy for your boat is more expensive than an actual cash value policy
- It may have a specific age limit for your boat.
- Agreed value coverage isn’t usually available for sport and high-performance boats.
Positives of actual cash value:
- This kind of coverage is cheaper than agreed value coverage.
- As your boat gets older, your boat insurance provider may insist on an actual cash value policy and savings will come with that.
Negatives of actual cash value:
- It only pays up to the value of the boat at the time the boat was a total loss.
- Actual cash value coverage may not offer enough coverage if your personal belongings are stolen or damaged n your boat
- If you purchase new items to replace the ones you've lost, you'll pay the difference between the insurance payout and the cost of a brand new item.
You can also add a guaranteed replacement value endorsement to your boat insurance policy. Ask about any conditions that may apply.
Speak to a Western Financial Group boat insurance expert about agreed value coverage versus actual cash value coverage for your boat.
Boat insurance protects your investment in your boat. Marinas and lenders may require boat insurance. Speak to your Western Financial Group boat insurance expert about a marine policy for your boat.
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