Actual Cash Value vs. Agreed Value Coverage
Actual Cash Value and Agreed Value are terms that refer to how the insurance company calculates what they will give you at the time of a loss. If your policy is an Actual Cash Value policy and you were to have a loss, for example the boat is stolen., the adjuster looks at the value of your boat (ie. year, make, model etc) at the exact time of loss then applies depreciation for its use. The insurance company then settles your claim with this amount. If your policy is an Agreed Value policy, the insurance company is agreeing to honour the value of the boat at the time the policy was written. For example, you buy a new boat for $30,000 and insure it for that value. Five years later it’s stolen. You know the boat is now not worth $30,000 and the insurance company knows it’s not worth $30,000 but because the policy is an Agreed Value policy, you are entitled to $30,000. Agreed Value policies are by far the better policies so before you buy your marine policy make sure to ask if it’s an Actual Cash Value or an Agreed Value policy.