1. Agreed Value
This is the most desired coverage that is a set amount as stated on the declaration page of your policy. This type of coverage guarantees that if your vessel is a total loss you will be paid the amount listed as hull coverage.
Note: If there is partial loss depreciation it will still be taken by the insurance company. This coverage is usually more expensive than the other types of coverage but is well worth the expense when you have an older vessel in today’s marketplace as it takes the guesswork out of a claim and also any subjective offers to settle the claim.
2. Actual Cash Value
This coverage is based on the marketplace at the time of loss. Each company uses different methods to arrive at a settlement offer. Some use comparables, others use book values. Some use a mixture of the two. It is impossible to know what they will offer and therefore adds to the anxiety of the claim process. An example of this would be today’s values on vessels. We all know that this is a buyers market. The price you paid for your vessel 2 years ago is most likely much higher than what the value is today. If you still owe on you vessel the claim value may not even pay off the loan. This can also work in your favor if the above situation were reversed.
3. Stated Amount
This coverage is the most misunderstood of all coverage’s whether it is boat insurance or auto insurance. A stated value policy more closely resembles an actual cash value policy except that the value stated is the very most the company is on the hook for.
Example: You find a great deal and purchase a boat for $80,000 so you purchase stated amount coverage in the amount of $80,000. The boat is actually worth $100,000 at the time loss. Unfortunately, you will only be paid the $80,000.00. With an actual cash value policy you would have been paid the full amount of $100,000.00. We all hope that the vessel we purchased is worth more that we paid for it, right? This has happened. Now, let’s say the ACV is only $60,000. You will only be paid $60,000. The stated amount on the policy is only a cap, not an agreed value.