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When you work with an insurance agent to design a boat insurance policy, you'll often have a choice between "agreed value" and "actual cash value." Many people don't understand the intricacies of these two options or how they differ. If you're shopping for boat coverage, it's important you know the difference.

What Is Agreed Value?

If you choose an agreed value policy, the insurer will pay an agreed amount toward the claim if the boat is deemed a total loss due to a covered hazard. In other words, you can get the total value of the craft—minus the deductible—which often does not happen under actual cash value plans.

You will have to have the watercraft appraised, and the amount you pay each month will likely be higher than the alternative, but you know in advance what you'll receive in return for a total loss claim. Some allowance will be made for high-wear items, like sails, trailers, and certain other equipment.

What Is Actual Cash Value?

Insurance agent in Mooresville, INIf you and your insurance agent design an actual cash value policy, the amount you receive in the event of a total loss claim is uncertain. It depends on the age and condition of the boat. Such a policy takes into consideration depreciation, or wear and tear on the craft.

 Frequently, your payout will not be as sizeable as it would be for an agreed value policy. However, monthly premiums are typically less expensive, the need for an appraisal is less critical, and the claims process is often smoother and less complicated. 

 

The choice of which type of policy is right for you depends on how risk-averse you are and whether you want to pay an additional amount for greater certainty in terms of claims payout amounts. To have an experienced insurance agent help you design the right boat insurance policy, contact State Farm® Agent Bruce Richardson in Mooresville, IN. Bruce and his team have been serving clients in and around Morgan County since 1994. Along with boat coverage, they also specialize in business, auto, motorcycle, home, renters, and life insurance. Check out their Facebook page or call (317) 831-3500 to have a friendly, knowledgeable agent provide an insurance quote.

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