Boat & Marine Insurance Basics

Boat insurance can be a very confusing topic,policies are not standardized and each insurance
especially for first-time boat owners.  No standardscompany may have their own spin.  Generally
exist across insurance companies, so it is often up tospeaking though, the differences boil down to two
the boat owners to read the fine print in order to figuremain points.
out the specifics of their boat insurance policy.  Not- Replacement Cost vs. Depreciated Value –
understanding these subtle differences before youReplacement cost and depreciated value differ in one
choose an insurance provider can cost you thousandskey aspect.  The amount a depreciated value policy
of dollars in the event of a loss.  Losses come in twopays is subject to depreciation, whereas in a
varieties, total losses and partial losses.  Generallyreplacement cost policy, depreciation is largely not
speaking, total loss policies typically fall into threefactored in.   Depreciation is calculated by the boat
categories:insurance companies using a predetermined,
- Agreed Value – Agreed value is the simplest andnon-published depreciation schedule.  Since
most easily understandable of the total loss policydepreciation reduces the amount you are paid in the
types.  In an agreed value policy, the boat owner andevent of a partial loss, boat owners would be best
the insurance company agree on a value, prior to theserved finding a boat insurance provider who offers a
loss.  In the rare event that a total loss occurs, thereplacement cost policy.  Despite this difference, most
boat owner is paid the agreed upon amount.replacement cost plans do not completely omit
- Actual Cash Value – Actual cash value isdepreciation from their policy structure.  Replacement
determined by third party sources such as a usedcost plans tend to state specific parts that are subject
boat price guide and other comparable boats listed forto depreciation.  These parts generally have shorter
sale.  In a policy that is based on actual cash value,life spans, such as canvas, sails, or plastics.  It should
the amount a boat owner is paid is based on the valuealso be noted that depreciation is not applied to labor,
of the boat at the time of the loss.  The boatstorage charges, and other non real property items.
insurance provider will either pay the insured value or- Remanufactured vs. New Parts – Some
the actual cash value at the time of the loss,insurance providers will actually discount depreciation if
whichever is lower.you agree to use a remanufactured part.  This
- Boat Replacement – A boat replacement policyreduced depreciation can save boat owners
replaces your boat with a new boat.  This type ofthousands of dollars in a partial loss.  There are even
coverage is only available to boat owners whosome insurance companies that don't apply any
purchased a new boat and will only last for the firstdepreciation to remanufactured parts.  Again, boat
two to three years of ownership.  Once the boatowners would be best advised to seek out boat
reaches the age where a boat replacement policy isinsurance providers that use the latter and don't apply
no longer applicable, the policy form will change to onedepreciation to the amount they pay.
of the two other types.No two boat owners likely have the exact same
Although most people buy boat insurance for the rarerequirements for a boat insurance provider.
occasions in which they experience a total loss, theUnderstanding these subtle differences in policies is
majority of boat insurance claims are partial losses. essential to choosing the best insurance provider to
Partial losses are handled a bit differently than totalmeet your specific needs.
losses.  Similarly to total loss policies, partial loss