What is the difference between Agreed Value and Actual Cash Value policies?
The cost of a boat insurance policy varies significantly depending upon the choice of an agreed value policy and an actual cash value policy. An agreed value policy is often described as “you get what you pay for,” meaning if your boat suffers a total loss, the insurance company pays the value of the boat you agreed on at the start of your policy, regardless of market value. An actual cash value policy differs in that it pays on the market value of the boat at the time of the loss, taking into account depreciation and the condition of the boat. In terms of premium, an agreed value policy typically costs more and provides a higher degree of overall coverage. An actual cash value policy is more economical and may be a smart choice for the owner of an older boat.
