The two ways a boat policy values your hull
Agreed value
You and the carrier agree on the boat's value when the policy is written, and that number is printed on the declarations page. If the boat is a total loss, the policy pays that amount, less the deductible, with no deduction for depreciation. The value is reviewed at renewal.
Actual cash value
The policy pays what the boat was worth at the moment of the loss: replacement cost minus depreciation for age, hours and condition. A total loss on a seven-year-old boat pays a seven-year-old boat's market value, which may be well below what you still owe on it.
How each one pays after a total loss
Picture two identical five-year-old bowriders, each insured for the value the owner paid, each sunk in the same storm.
- The agreed value owner receives the amount on the declarations page minus the deductible, and the discussion is over.
- The actual cash value owner receives the carrier's estimate of what the boat would sell for today minus the deductible. The owner can dispute the valuation with comparable listings, but the starting point is a depreciated figure.
If the boat is financed, the gap between the loan balance and an actual cash value payout comes out of the owner's pocket. That is why lenders push newer boats toward agreed value.
Partial losses: the detail most people miss
Settlement basis also affects repairs. On many actual cash value policies, replaced parts such as a lower unit, upholstery or electronics can be depreciated before the claim is paid. Agreed value policies more often pay repairs at replacement cost for the hull and machinery, with depreciation applied only to certain items like canvas, sails, batteries and outdrives, if at all. Ask for the policy's partial-loss wording, not just the headline basis.
Which boats fit which basis
- Agreed value fits: boats less than roughly ten years old, financed boats, boats with a new repower or significant upgrades, and any boat whose owner would not want to argue about market value after a loss.
- Actual cash value fits: older boats whose value has leveled off, boats owned outright where the premium saving matters more than the payout certainty, and boats the owner would replace with a used boat anyway.
Carriers also set their own rules. Some will not write agreed value on a boat past a certain age, and some require a survey for higher-value hulls. Our four boat carriers differ here, which is one reason to compare rather than take the first quote.
Questions to ask before you compare prices
- Which basis is this quote on, and what is the hull value?
- How are partial losses paid, and what is depreciated?
- Is the motor valued separately, and how?
- Does the agreed value drop at renewal, and how is it reviewed?
- What deductible applies to the hull, and is there a separate one for named storms?
- Are the trailer, electronics and personal effects on their own limits?
When we prepare a boat quote in Elkin we show both bases side by side when the carrier offers both, so the choice is yours with the numbers in front of you. Start on the boat insurance overview or send your current declarations page for a review.
Agreed value questions
What does agreed value mean on a boat policy?
The hull value you and the carrier agree on when the policy is written is the amount paid after a total loss, less the deductible, with no deduction for depreciation. It is printed on the declarations page and reviewed at renewal.
What does actual cash value mean on a boat policy?
The boat's market value at the time of the loss, meaning replacement cost minus depreciation for age, hours and condition. It generally costs less in premium and pays less after a total loss.
Is agreed value worth the extra premium?
For a newer or financed boat, usually yes, because it removes the gap between a depreciated payout and the loan balance or replacement cost. For an older boat owned outright, actual cash value is often the sensible choice.
Does agreed value cover depreciation on repairs?
It depends on the policy. Many agreed value policies pay repairs to the hull and machinery at replacement cost and depreciate only certain items such as canvas, batteries and outdrives. Always read the partial-loss clause.
Can I switch from actual cash value to agreed value later?
Often yes at renewal, subject to the carrier's age limits and sometimes a survey or photos. Tell us before renewal so we can quote both.