Boat Insurance Replacement Cost Versus Actual Cash Value


A boat insurance policy may provide coverage for your boat on an actual cash value or agreed value basis. It is important to understand these features as they will determine how the policy will compensate you after a covered loss. Both valuation methods can help repair or replace your damaged property. One key difference is that actual cash value policies account for depreciation, while agreed value policies do not.

Actual Cash Value Policies

A boat insurance policy with actual cash value coverage will determine the value to repair or replace your damaged property and then reduce that amount by any depreciation applicable due to the age of the property. 


  • Example: Striking a submerged object is a commonly covered cause of loss under a boat insurance policy. Under an actual cash value policy, the policy would pay the cost to repair or replace property damaged by striking a submerged object (up to the policy limit) less any depreciation due to the age of the property


Agreed Value Policies

Agreed value coverage helps you repair or replace damaged property without adjusting for depreciation.


  • Example: If your boat is damaged in a covered loss and insured under an agreed value policy, the policy will likely pay for necessary repairs without any adjustment for depreciation.


An agreed value will also pay you the agreed value of your boat in the event of a covered total loss, even if the boat is worth less at that time.  

» MORE: Personal Property and Equipment Coverage – Explained

Do I Have Actual Cash Value or Agreed Value Coverage?

If you’re not sure which coverage type you have, consult the declarations page of your policy or contact your insurance provider with you have any questions or concerns.  

Deductibles and Limits

Regardless of whether you have actual cash value or agreed value coverage, keep in mind that any covered loss will likely be subject to a deductible

Additionally, both types of coverages are subject to limits within the policy. Limits outline the maximum amount your policy will pay for a covered loss. It’s best to review your policy and make sure you understand the type of coverage on the policy as well as its deductible and limits. You can always contact your insurance provider to make any necessary adjustments to your coverage.

» MORE: Insurance Premiums and Deductibles – Explained

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