When designing the insurance policy for your water vessel, you’ll have to choose between agreed value and actual cash value in case a covered event deems the boat a total loss. Since your choice will ultimately determine the amount of coverage your boat insurance provides if disaster strikes, it’s important to give each considerable thought. Here’s a closer look at both types of policies.

Agreed Value 

In the event of a covered catastrophe, an agreed value policy will pay out a predetermined amount that the carrier and policyholder decided in advance. Generally speaking, the policyholder will have the vessel appraised to confirm its total value at the start of the policy.

This will become the agreed value, and it’s the amount the claimant will receive—minus the deductible—if the craft is ever deemed a total loss. Since agreed value does not change over the years—in other words, it doesn’t account for depreciation—such policies tend to have higher premiums. 

Actual Cash Value 

In the event of a total loss, a policy based on the vessel’s actual cash value will pay out the craft’s current market value. In other words, it will compensate the policyholder for the boat’s replacement cost minus whatever depreciation has occurred since the time of purchase. 

Much like cars, water vessels depreciate steadily every year. While there’s no standard depreciation schedule—it depends on a variety of factors that are unique to each craft—claims adjusters can apply a number of formulas to determine a boat’s actual cash value. Since this may be a lot less than the purchase price, policies based on actual value tend to be more affordable. 

For a boat insurance policy that provides everything you need—and nothing you don’t—turn to Wilson Insurance Agency in Dalton, GA. Since 1969, this independent agency has been helping clients protect their biggest purchases. Their knowledgeable agents assist with all kinds of policies, including those that provide auto, home, and business coverage. To request a quote for boat insurance, reach out online or call (706) 278-0549.