The different types of "loss settlement" valuations

There are several types of "Valuations" that you can have for your watercraft insurance policies. The two most common forms are:

Actual Cash Value (often referred to as ACV)

Agreed Value

Actual Cash Value policies, in my opinion, on watercraft are not a good idea. ACV policies take depreciation into account when settling a total loss claim. ACV allows a lot of room for "negotiation" on the part of the insurance company, which will rarely come out in the claimants favor. ACV policies will take the "fair" market value of the boat, less your deductible and then they will cut you a check for that amount. ACV policies are often times a cheaper option annually, but in the event of a claim, they cost you far more money than you saved annually by choosing an ACV policy.

Most major carriers will offer the option for ACV vs. Agreed Value as an endorsement. Check with your carrier to ensure that your policy is for AGREED VALUE not ACV. If they tell you that you have the "equivalent" of the AGREED VALUE, do your research. If they use the words fair market value or depreciation anywhere in their statement of equivalent it is NOT an agreed value policy. POLICYHOLDER BEWARE.

Agreed Value policies are very simply to understand and offer the best financial protection for boat owners. Agreed Value is when you and the insurance company settle on an agreed dollar amount that the boat is worth and you write up a contract (policy) based on that amount. In the event of a total loss, you get the agreed upon amount less your deductible. There is no back and forth, there is no depreciation.

Keep in mind, with an agreed value policy, you can only insure for the dollar amount that you have in the boat. You can not buy a boat for $100,000 and then insure it for $200,000. In the event of a claim, you would be profiting $100,000, that is not the intention of insurance. The pure purpose of insurance is to INDEMINIFY or bring you back to the initial financial state.

Post any questions you have in regards to valuation of insurance policies below, and I will answer them for you.