Agreed value vs actual cash value
Decided when the policy is written, not when it sinks.
This is the setting that decides what a serious boat claim is worth, and it is agreed at the point the policy is written rather than argued at the point of loss.
It matters more on a boat than on most insured property, because boats depreciate steadily and a total loss is a realistic outcome rather than a remote one.
The difference
Agreed value settles a total loss at the figure stated on the policy, agreed in advance between you and the insurer. Actual cash value settles at what the vessel was worth immediately before the loss, which means the stated limit less depreciation.
| Agreed value | Actual cash value | |
|---|---|---|
| At a total loss | Pays the agreed figure on the policy | Pays the depreciated value at the time of loss |
| Depreciation | Not applied to the hull settlement | Applied, and boats depreciate steadily |
| Certainty | You know the number before anything happens | The number is established after the loss |
| Premium | Higher | Lower |
| Availability | Usually offered on newer or well-maintained vessels | Commonly the basis on older vessels |
Why it bites harder on a boat
Two reasons. Boats depreciate more predictably than houses, and a total loss is a genuine possibility — a vessel can sink, burn or be destroyed in a storm in a way a building usually is not.
So the setting that only shows up in a total loss is the setting most likely to be tested. On an older vessel insured at actual cash value, the settlement can be a long way below what the owner believed the boat was insured for.
The limit on the declarations page is not a promise to pay that amount. On an actual cash value policy it is a ceiling, and depreciation sits underneath it.
Partial losses are treated differently again
Even on an agreed value policy, partial losses are frequently settled with depreciation applied to the parts replaced — sails, canvas, upholstery, outboards and electronics are the usual categories.
So a policy can be agreed value for a total loss and effectively actual cash value for the repair of a partial one, which surprises owners who thought they had bought their way out of depreciation entirely.
It is worth asking specifically how partial losses are settled rather than reading only the headline basis.
Setting the agreed figure
An agreed value only helps if the figure is right. Set it too low and you are under-insured with certainty rather than by accident; set it far too high and an insurer will generally decline to write it.
A survey is the usual basis, and insurers frequently require one on older vessels in any case. Keep it, along with records of significant work and equipment, because that is what supports the figure at renewal.
Revisit it periodically. A figure agreed years ago and rolled forward without thought is the most common way this setting quietly stops matching the vessel.
Common questions
Agreed value gives certainty about a total loss and is generally worth the premium difference where it is offered. Actual cash value is commonly the only basis available on older vessels.
Usually only for a total loss. Partial losses are frequently settled with depreciation applied to replaced items such as sails, canvas, upholstery and electronics.
Generally from a survey, which insurers often require on older vessels anyway. Keeping the survey and records of significant work is what supports the figure at renewal.
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This page is general information, not advice about your specific circumstances. A licensed insurance professional can tell you what’s actually available to you.
General information only, not insurance advice. Coverage, availability, and terms vary by insurer and by state, and are subject to underwriting. Quote My Policy LLC is a licensed insurance producer. Nothing here binds coverage.