Insurance policies: agreed value or actual cash value?

[mnackerman]

I'm purchasing my first sailboat and looking into insurance options. I've had a survey done so I have an idea of the boat's value. I'm unclear on the difference between agreed value and actual cash value. If anyone has advice, I'd appreciate it. Sorry if I'm posting a duplicate or in the wrong area -- I'm new here!


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[sailorboy1]

Agreed value is just that - you agreed on it, pay based on it, and that's the amount of the pay out if something totals it

Actual value is what the insurance company decides the value of your boat is. Kind of like how car insurance works.

every policy I've had was an a greed value policy

[Tkeeth]

I had an agreed value policy that they came back and made me insure for actual value per the survey. Typically you would take an agreed value at less than survey to save a little on insurance, but still cover what you got in it. They may not accept if in my case they decided that the premium wasnt enough in case of loss.

[jmiller148]

Not a big boat or policy here. We first had it based on agreed, but they upped it upon request according to the price on the survey. It was only a 4k difference. Foremost is the insurance.

[meirriba]

Agreed saves discussions. Actual value will be subject to market fluctuations and surveyor's whims (and I am a surveyor...).

[ka4wja]

mnackerman,
As Sailorboy and others have mentioned, these are pretty much they say they are...

--- Agreed Value = the value that YOU and INS Co. agree the boat has....this is typically supported by a Price and Ins (P&I) Survey...
(and this is typically the best approach for most cruising boats these days....)


--- Actual Cash Value = What the current market value of the boat is...which can, of course, cause much confusion and even argument...

BUT...
But, something that you should be aware of is that most "actual cash value" policies are based on depreciated value...
Which in the case of a total loss, would be understood to be the current market value, but...
But, in the event of partial loss, such as damage from hurricane, etc....this means that whatever you've filed a claim for (mast. rigging, hull gel coat, etc. etc.), the claim payout will be based on the depreciated value of that item/system...
You must be aware that Ins Co. will usually have different depreciation schedules for various items/systems... (electronics might be a 5 year schedule, but the mast might be 15 years....and the standing rigging might be 10 years...etc. etc...)



Hope this helps...

Fair winds...

John

[sailorboy1]

Originally Posted by sailorboy1

every policy I've had was an a greed value policy

that's the best typo mistake I think I've ever done

[wrwakefield]

Originally Posted by mnackerman

I'm purchasing my first sailboat and looking into insurance options. I've had a survey done so I have an idea of the boat's value. I'm unclear on the difference between agreed value and actual cash value. If anyone has advice, I'd appreciate it. Sorry if I'm posting a duplicate or in the wrong area -- I'm new here!


Sent from my iPad using Cruisers Sailing Forum

Welcome to the forum, Mnackerman.

Marine insurance is an unregulated industry, so your questions are wise.

I have always preferred an All Risk and Agreed Value policy on my vessels over the years.

Since this comes up a lot, I published a brief page with more details on our blog if you are interested. [I had the page vetted by a couple of marine insurance brokers for accuracy, as I am not an insurance person...]

Best wishes finding what is right for you.

Cheers!

Bill

[alaskaflyfish]

I go by agreed value do to unknown variables such as location of vessel. For instance, my boat is in South-central Alaska which adds to its value due to the fact it takes quite a lot of money to get the boat here. If an insurance adjuster tried to market value the boat based on Seattle values it would list at least 10k less. Market value in Alaska is much higher due to scarcity and shipping cost.

[denverd0n]

Originally Posted by Tkeeth

Typically you would take an agreed value at less than survey to save a little on insurance...

When I have had an "agreed value" policy it was because the survey value was much less than I wanted the boat covered for, not more. That is, not to save on money, but to be sure that the real value of the boat was covered.

In my experience, insurance surveys (all surveys, really) rarely reflect that actual value of the boat.

[Stumble]

As an attorney I want my clients to have an actual value policy, because the arguments over how much the boat is worth can consume hundreds of billable hours. As an owner I want an agreed value policy for the same reason.

Note: the above is meant in jest, I recommend all my clients have an agreed value policy no matter what is being insured. Except possibly during a refit when the value of the vessel is rapidly going up (too rapidly to account for by surveys).

[mowerandy]

Don't expect not to need a lawyer in the event of a claim on an agreed value policy which exceeds the generally perceived market value. Wife had a rare car once which was totalled under an agreed value policy and the insurers tried everything you can imagine not to pay out, including threats, bullying, experts opinions etc. etc.
They settled out of court in the end, for the full agreed value of that irreplaceable vehicle, but it was one hell of a fight before we got there.

[Rustic Charm]

Originally Posted by ka4wja

mnackerman,
As Sailorboy and others have mentioned, these are pretty much they say they are...

--- Agreed Value = the value that YOU and INS Co. agree the boat has....this is typically supported by a Price and Ins (P&I) Survey...
(and this is typically the best approach for most cruising boats these days....)


--- Actual Cash Value = What the current market value of the boat is...which can, of course, cause much confusion and even argument...

BUT...
But, something that you should be aware of is that most "actual cash value" policies are based on depreciated value...
Which in the case of a total loss, would be understood to be the current market value, but...
But, in the event of partial loss, such as damage from hurricane, etc....this means that whatever you've filed a claim for (mast. rigging, hull gel coat, etc. etc.), the claim payout will be based on the depreciated value of that item/system...
You must be aware that Ins Co. will usually have different depreciation schedules for various items/systems... (electronics might be a 5 year schedule, but the mast might be 15 years....and the standing rigging might be 10 years...etc. etc...)



Hope this helps...

Fair winds...

John

this one.

[Rustic Charm]

Assumed liability

Disclaimer - I'm Australian so this is from a local perspective And I'm an Aussie so I don't necessarily know what i'm talking about

But, at least over here there is a thing that's not written in policies but many home owners have discovered with 'undervaluing' your insurance. I can't see why it wouldn't be the same with boats.

Basically it means, 'if' you insure your boat for less than it's valued for, even if it's for an 'agreed' value, you are then accepting some of the liability yourself. This means that if you have a 'total' loss, then all is fine, you get paid out for the total of what you insured for. BUT, if you under insure the value, say for example you insure an $80k boat for an agreed value of $40k, and you have a fire in the gally and it does $20k damage. Then you have assumed %50 of the liability and they will pay you out $10k on your agreed value. You of course will then be left with a $10k loss.

My understanding is the idea of 'assumed risk' is at least in Australia is not a policy written thing, but evolved through court findings and suits. Many people have discovered it the hard way.

[rosatte]

what about salvage cost say ur boat sunk in a marina dose insurance pay for costs of removing vessel from the water or dose that onnis fall on owner..