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Insurance wording matters most when the boat is damaged, not when the policy is purchased. Two policies can insure the same hull and carry similar limits while producing very different claim settlements: one may use agreed value and the other actual cash value. This guide explains the distinction, shows where depreciation can appear, and gives you a practical policy-review checklist.
This is general educational information, not insurance advice. Policy language, endorsements, deductibles, state law, and claim facts control. Ask a licensed insurance professional to interpret your own policy.
The short version
With agreed value, the policy and insurer establish a stated value when the coverage is written. Chubb explains that a total loss normally pays the amount shown on the policy, subject to the policy terms and deductible. With actual cash value, a total-loss settlement is generally based on the boat’s current market value, with depreciation and other valuation factors considered. ACV coverage can cost less, but it can also leave a larger gap between what you paid and what the claim pays.
The Massachusetts Division of Insurance notes that boat coverage varies and that homeowners insurance may provide only limited protection for small boats. Do not assume the declarations page tells the whole story.
How the two loss-settlement methods differ
| Question | Agreed value | Actual cash value |
|---|---|---|
| When is value established? | When the policy is written or renewed | When the loss is adjusted |
| Total loss starting point | Stated amount on the policy, subject to terms | Current market value, with depreciation considered |
| Typical trade-off | Often higher premium | Often lower premium, more valuation uncertainty |
| Partial loss | May use replacement-cost treatment for some items | May reduce payment for physical depreciation |
These are general patterns, not promises. Chubb specifically cautions that items such as canvas, sails, trailers, and some machinery may still receive depreciation allowances even on an agreed-value policy. Read the partial-loss section instead of assuming the total-loss rule applies to every part.
Step 1: Find the loss-settlement wording
Open the physical-damage section and search for “agreed value,” “actual cash value,” “total loss,” “partial loss,” “depreciation,” and “deductible.” Then compare those terms with the declarations page. If the declarations page lists a value but the body of the policy describes a different settlement method, ask the insurer to explain the relationship in writing.
Step 2: Check what is included in the stated value
Confirm whether the limit includes the hull only or also the outboard, trailer, dinghy, electronics, safety equipment, and permanently attached accessories. A boat can be correctly valued while important equipment remains subject to separate sublimits. Keep invoices, serial numbers, photographs, surveys, and improvement records in one claim folder.
Step 3: Model a partial loss, not just a sinking
Ask for a written example involving a damaged engine, a torn canvas enclosure, and a bent trailer. Ask whether depreciation applies, whether the deductible is per occurrence or per item, and whether the insurer can use original-equipment or comparable parts. This exercise often reveals more than a premium comparison.
Step 4: Revalue after major changes
Revisit the policy after a refit, new electronics, a repower, a new trailer, or a long period of inflation. Do not simply increase the limit by adding receipts. Ask whether the insurer requires a survey, appraisal, photographs, or documentation of the work. A higher number can also affect premiums and deductibles.
Common mistakes that create claim friction
- Comparing only annual premium and ignoring the settlement basis.
- Assuming agreed value means every damaged item is paid new for old.
- Leaving the trailer or tender out of the inventory.
- Failing to document upgrades before a loss.
- Using “market value” as though it were a single objective number.
Questions to send your insurance professional
- Is my hull insured on agreed value or actual cash value?
- What happens to the engine, trailer, sails, canvas, and electronics in a partial loss?
- Is the deductible applied before or after depreciation?
- What evidence would you need to update the value at renewal?
- Are salvage, wreck removal, emergency towing, and pollution liability separate limits?
Chubb describes physical-damage and liability coverage as separate parts of a typical boat policy, and its guide also highlights emergency towing, wreck removal, and pollution-related responsibilities. Those sections deserve their own review.
Final check before renewal
Write down the policy’s settlement basis, stated value, deductible, major sublimits, and the documents you would need after a loss. Then compare that one-page summary with your boat, trailer, and equipment inventory. If the policy no longer matches how you use or store the boat, ask for revised quotes and written explanations before renewing.
Related reading: how hurricane deductibles change the claim math and the real cost of boat ownership.
Sources: Massachusetts Division of Insurance boat-insurance overview; Chubb’s boat-insurance guide.