Does the policy include replacement coverage, and is it “agreed value” or “actual cash value”?
“Agreed value” coverage for your boat and engine means that the coverage value for replacement is decided and agreed upon by you and the insurance underwriter at the time you purchase the policy, with no reductions for depreciation. This means that in case of a claim, your policy will pay for repairs or replacement on a replacement cost basis — you will receive “new for old.” If the loss is considered total, the insurance will pay the agreed value as reflected in your policy, minus your deductible. Some items that are subject to appreciable wear and tear, such as canvas covers, sails, trailers, and some mechanical equipment, may still be subject to depreciation, despite having agreed value replacement coverage. This is common and accepted practice. Don’t let your agent talk you into saving a few dollars with an ACV, or Actual Cash Value, policy. ACV policies generally have lower premiums, but they cover your vessel only up to the current market value of the boat at the time of the loss
