WakezoneINS

There are several types of "Valuations" that you can have for your watercraft insurance policies. The two most common forms are:

Actual Cash Value (often referred to as ACV)
Agreed Value


Actual Cash Value policies, in my opinion, on watercraft are not a good idea. ACV policies take depreciation into account when settling a total loss claim. ACV allows a lot of room for "negotiation" on the part of the insurance company, which will rarely come out in the claimants favor. ACV policies will take the "fair" market value of the boat, less your deductible and then they will cut you a check for that amount. ACV policies are often times a cheaper option annually, but in the event of a claim, they cost you far more money than you saved annually by choosing an ACV policy.

Most major carriers will offer the option for ACV vs. Agreed Value as an endorsement. Check with your carrier to ensure that your policy is for AGREED VALUE not ACV. If they tell you that you have the "equivalent" of the AGREED VALUE, do your research. If they use the words fair market value or depreciation anywhere in their statement of equivalent it is NOT an agreed value policy. POLICYHOLDER BEWARE.


Agreed Value policies are very simply to understand and offer the best financial protection for boat owners. Agreed Value is when you and the insurance company settle on an agreed dollar amount that the boat is worth and you write up a contract (policy) based on that amount. In the event of a total loss, you get the agreed upon amount less your deductible. There is no back and forth, there is no depreciation.

Keep in mind, with an agreed value policy, you can only insure for the dollar amount that you have in the boat. You can not buy a boat for $100,000 and then insure it for $200,000. In the event of a claim, you would be profiting $100,000, that is not the intention of insurance. The pure purpose of insurance is to INDEMINIFY or bring you back to the initial financial state.


Post any questions you have in regards to valuation of insurance policies below, and I will answer them for you.

Jammin'

Let's say I'm really stupid and I have put over $100K into a boat that would be hard to sell for $40k and I have the receipts over a short period of time to prove it (mind you that this is a hypothetical question before you go jumping to conclusions ). Can I insure my boat with an agreed value of some dollar amount over the market value, but well under the amount spent?

WakezoneINS

Provided I am reading your question correctly and we are talking about an AGREED VALUE policy, then yes, you insure for the amount of money you have into the boat. For example,

I just had a client with a boat valued around $70,000 market value. he is putting brand new parts into the boat that is costing him around $90,000. We are insuring his boat for an agreed value of $160,000. He has receipts to prove his total investment in the boat.

The thing is with AGREED VALUE, you can only insure the boat for the amount of money you have in the boat and no more. So if you paid $40K for a boat that is valued at $100K, under an agreed value policy, you can only insure for $40K BECAUSE in the event of a total loss you would profit if it were insured for the $100,000 and insurance is to bring you back to square one (less your deductible ) not for you to profit off of.

Hopefully I answered what you wanted me to answer and it makes sense. Great question!

WakezoneINS

Replacement Cost is also another form of valuation and is usually only available for new (or newer) aged boats. This is a form of coverage that is a great option but you do pay to have the endorsement (average $400 more a year).

In the event of a total loss the replacement cost option pays for you to get a new boat of like kind and value, obviously, there are always forms and endorsements added to that which appear in the policy language.

Just wanted to let you know of this option.

happy hours

I have two boats (one little cheapie 17' CC) and I have them both insured as "agreed value" for slightly more then I paid for them. They both are long paid for and I have done tons of upgrades to them both boats. Does that mean I could not actually obtain the agreed value from IC in the case of total loss? I ask because I do not have receipts etc. for mot of the upgrades (intangibles) and somethings like the trailers have increased greatly in price.

WakezoneINS

When you insure your boat for an agreed value, then that is the amount that is paid out in the event of a total loss, if the insurance company "agreed" upon that value and the policy was written without the request of receipts, you will get that amount.

Just a side note, if you upgraded your tailer then make sure that your policy shows enough trailer coverage as it is usually a limit that is listed separately in the policy. There are some carriers, such as Progressive, that lump the agreed value of the boat and trailer into one.