Because your boat required a considerable outlay, it's necessary to protect that investment with boat insurance. When designing a policy, you'll likely face two different types of payouts. The first is the boat's actual cash value. The second is an "agreed value" that you negotiate with the insurer. If you’re unfamiliar with these terms, the following information will help you understand your choices.

Actual Cash Value

If you choose to insure your boat for its actual cash value, the maximum payout you will receive is its market value at the time of the accident, fire, or another covered event. This figure refers to its replacement cost minus depreciation. Depreciation is the amount that the asset's value has decreased over time due to perceived wear and tear.

For instance, a typical policy might depreciate your boat's value at 7% per year or a more rapid 15% on components that wear more quickly, such as canvas.

This means you'll receive only the replacement value minus that percentage for every year you've owned it. The depreciation schedule is normally unpublished. This is the standard, and least expensive, type of boat insurance.

Agreed Value

Instead of actual cash value, you can also purchase agreed value boat insurance. For these policies, your maximum payout is an amount that will be pre-decided by you and the insurer. In the event of a total loss, you receive that amount without any reduction due to depreciation, though certain components may be subject to partial coverage due to wear and tear.

On the other hand, this type of coverage comes with a considerably higher monthly premium due to your insurer's increased risk. 

To have an experienced agent help you design a boat insurance policy that fits your needs and budget, contact Tammy Ross Insurance in Monroe, NC. This independent agency has been serving Union County clients since its founding in 1998. In addition to boat insurance, they also specialize in business, home, auto, motorcycle, and life insurance. Visit their website to request a quote online or call (704) 233-4981 to speak to an agent today.