When you're comparing boat insurance policies, the single most important coverage decision you'll make is this one. The difference can be tens of thousands of dollars at claim time.
Under an agreed value policy, you and the insurance carrier agree on your boat's value when you buy the policy. If your boat is declared a total loss — sunk, destroyed in a hurricane, stolen and unrecovered — you receive that agreed amount. No depreciation. No market value debate. No argument about what your boat was worth in the current market.
Under an actual cash value (ACV) policy, a total loss settlement reflects your boat's current market value minus depreciation at the time of loss. A boat you bought for $85,000 five years ago may be worth $55,000 today by the insurance company's calculation — and that's what you'd receive.
You buy a $120,000 sportfishing boat and insure it under an ACV policy. Seven years later, it's destroyed in a hurricane. The carrier calculates depreciation: 30–40% over seven years. Your settlement: $72,000–$84,000. You're short by $36,000–$48,000 on replacing what you had.
Under an agreed value policy, your settlement is $120,000 — what you agreed to when you bought the policy, regardless of depreciation.
For the vast majority of boat owners, agreed value coverage is the right choice. The premium difference is modest. The settlement difference at total loss time can be enormous. We make agreed value policies the default recommendation across all vessel types.
Actual cash value policies may make sense for very old, low-value vessels where the depreciation gap is minimal — but that's a conversation to have with your NBOA agent.
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