What is the difference between agreed value and actual cash value for boat insurance?

The difference comes down to how much the policy pays if your boat is totaled or stolen. With agreed value coverage, you and the insurer agree on a set dollar amount up front, and that is what you receive after a total loss, with no deductions for age. With actual cash value, the insurer pays what the boat is worth at the time of loss, after subtracting depreciation for age and wear. The same total loss can produce very different checks depending on which one you have.

Actual cash value, often shortened to ACV, accounts for depreciation, meaning the drop in value as something gets older. Boats lose value steadily, so an ACV settlement on an older boat can be far lower than what you owe or what you expected. You can read more in our explainer on actual cash value versus replacement cost.

Agreed value coverage removes that surprise. Because the payout amount is locked in when you buy the policy, you know exactly what you would receive if the boat is destroyed or stolen. It usually costs a bit more, but it protects you from a depreciated, lowball settlement on a boat policy.

Which one fits depends on the boat. Agreed value is popular for newer, well-kept, or higher-value boats where depreciation would sting the most. ACV can be a reasonable, cheaper choice for an older boat with modest value, where the gap between the two is small.

For example, a Lake Lanier owner insures a five-year-old boat. Under agreed value, the policy is written for $45,000, and after the boat is destroyed in a marina fire, he receives the full $45,000. A neighbor with the same boat on an ACV policy receives only about $30,000 after depreciation, leaving him $15,000 short of replacing it.

One detail to check is whether the agreed value applies to a partial loss or only a total loss. Many policies pay agreed value when the boat is a total loss but settle smaller repair claims on a different basis, sometimes with depreciation on certain parts like sails, canvas, or an outboard motor. Knowing how partial claims are handled prevents a surprise when a repair bill comes in lower than you expected.

The settlement basis is one of the most important choices on a boat policy, and it is easy to overlook. We can confirm how your boat is valued and recommend the right basis with a free coverage review at our coverage review page.