Insurance - Agreed Value vs. Actual Cash Value

[jameskeller76]

Just got a quote from BoatUS.

Agreed value (price I paid new) = $613 per year
Actual Cash value (market value) = $458 per year

Is it worth saving the $155 per year to get the cash value?

Seems that $155 is a cheap amount to pay to be able to buy a brand new boat in a total loss situation.

 

[Ronnie]

One of my boats (trailer, truck and all my gear) was stolen a few years ago. Boat u.s. Considered it a total loss because the tower was removed, along with one of the captains chairs and stereo system. Thankfully I had an agreed to value policy because at the time there werent many exact replacements available and those that were had asking prices greater than market value.

Is the incremental premium worth it? Only if you are ever unfortunate enough to make a valid claim but the same is true of most insurance policies. I've been paying boat us for almost 15 years now and only made that one boat related claim.

 

[Matt Phillips]

$155 per year is cheap for what could be an extra $10-20k of insurance in a matter of a few years.

With the boat being brand new, it may be worth it to have that extra for at least the first few years. There's no rule that says you can't change it in a few years when you renew...or at least negotiate a lower agreed value as it depreciates.

 

[Zonie]

Actual Cash Value (ACV) and stated value are very different. On most policies including most car policies the value is based on ACV. Every state has different laws to determine ACV including book value, comparable vehicles (or boats), or a combination. Stated value is often used on vehicles that are unique or difficult to determine value like a roadster or one of those custom flat-bottom V8 jet boats you see out west. In most cases, the policy still pays ACV but the stated value helps determine what the premium amount should be. You can insure a boat for what you think it's worth, say $20,000, but if it gets wrecked you still will get the value of the boat, which may or may not be $20K. (You can't insure a $10,000 boat for $20,000 and expect to receive 20k if it's damaged.)

 

[jameskeller76]

Actual Cash Value (ACV) and stated value are very different. On most policies including most car policies the value is based on ACV. Every state has different laws to determine ACV including book value, comparable vehicles (or boats), or a combination. Stated value is often used on vehicles that are unique or difficult to determine value like a roadster or one of those custom flat-bottom V8 jet boats you see out west. In most cases, the policy still pays ACV but the stated value helps determine what the premium amount should be. You can insure a boat for what you think it's worth, say $20,000, but if it gets wrecked you still will get the value of the boat, which may or may not be $20K. (You can't insure a $10,000 boat for $20,000 and expect to receive 20k if it's damaged.)

Sounds like you are saying that the Agreed Value Option is a waste because they will still just pay out the market value. I don't think this is correct. When I worked with a broker last year she suggested I go with the agreed option that way if the boat is a total loss I could go buy a brand new boat. And I'm not sure why there would be an agreed value option if it is just BS and they aren't going to pay on it.

 

[blacksapphirez]

Sounds like you are saying that the Agreed Value Option is a waste because they will still just pay out the market value. I don't think this is correct. When I worked with a broker last year she suggested I go with the agreed option that way if the boat is a total loss I could go buy a brand new boat. And I'm not sure why there would be an agreed value option if it is just BS and they aren't going to pay on it.

Actual Cash Value = Book Value
Agreed Cash Value= Fixed $ amount you have insured your boat for

Similar wording, totally different outcome

I imagine if you started out at 40k and you still pay premium for the AGREED cash value at 5 yrs, they will still pay out 40k even though your boat may be worth 20k

 

[Ronnie]

In my case I bought an agreed upon value policy to cover the $13,000 I paid for my boat and trailer when I got it used. Boat u.s. Paid me that amount plus the sales tax when the validated the claim. I also got some money for the personal effects like tubes and life vests. Boat u.s. Offers another policy as well, agreed value plus 10%, this I what I have now I thinks it's another $60 or so per year.

 

[Bennie]

Im jealous!! Down here (I guess since Im in coastal water) Boat US wanted $209 more per year.

I currently have my insurance with Farmer's who has a "boat replacement" policy. In other words if my boat is a total loss I go find a brand new 242LS ( or comparable) and its mine.

(However they don't allow trips to Bimini in anything less than 36ft, but then neither does my wife)

 

[jameskeller76]

Im jealous!! Down here (I guess since Im in coastal water) Boat US wanted $209 more per year.

I currently have my insurance with Farmer's who has a "boat replacement" policy. In other words if my boat is a total loss I go find a brand new 242LS ( or comparable) and its mine.

(However they don't allow trips to Bimini in anything less than 36ft, but then neither does my wife)

No Bimini! Bummer, my wife is excited about bimini and we were going to go this year until the MIL decided that we should do a family vacay this year. They are pushing for a cruise and I would rather get a root canal.

 

[Bennie]

That's great @jameskeller76 - she wants a cruise, YOU want a cruise.

Cruise her over to Bimini in your AR

 

[jameskeller76]

That's great @jameskeller76 - she wants a cruise, YOU want a cruise.

Cruise her over to Bimini in your AR

I don't think she's prepared for that kind of cruise.

 

[haknslash]

I went with agreed value with BoatUS on my 192. With the depreciation of a boat I'd rather pay the small cost upfront with the possibility of getting my money back out of the boat in the event of a total loss than to eat it all in a total claim with actual black book cash value.

 

[Zonie]

Sounds like you are saying that the Agreed Value Option is a waste because they will still just pay out the market value. I don't think this is correct. When I worked with a broker last year she suggested I go with the agreed option that way if the boat is a total loss I could go buy a brand new boat. And I'm not sure why there would be an agreed value option if it is just BS and they aren't going to pay on it.

Hi James, insurance is regulated at the state level so every state has slightly different rules. TX has some of the strangest so it would be best to contact your agent or insurer for an answer to that question. It's probably not a waste in your case but as the property gets older it will eventually be worth less so you may need to have the policy adjusted to avoid over-paying for insurance. We've all seen expensive pontoon boats neglected and left outside unprotected. It might have been a $30K boat when it was purchased at the boat show, but 3 or 4 years from now when the interior is rotted and it looks like muskrats have been living on it, the boat won't be worth as much. Regardless of what the owner still owes or thinks it's worth, in reality it is worth a fraction of what it was originally. Insurance doesn't cover wear and tear or lack of maintenance and for that reason if the boat were totaled somehow the owner won't get $30K, nor should they.

 

[Ronnie]

I will add that with boat u.s. the agreed to value could match but not exceed the sale price (new or used) to the insured. So their agreed value policy is really a price paid Policy. The agreed to value policy allowed me to get back everything I initially spent on the boat and trailer so I'm not complaining about the extra annual cost but may have if I had never made a claim like I did.

The agreed value plus 10% makes more sense for some and sounds like a farmers boat replacement policy. That is, if a 2016 Yamaha jet boat is declared a total loss in 2018 the agreed to value or price paid value will not cover the entire price of a new Yamaha jet boat since the price increases by a few thousand every year but the entire price may be covered with an agreed to value plus 10% policy and should be 100% covered under a "boat replacement" policy subject to the fine print of course.

Note if you have a lot of personal effects on board and want more than the standard $500 to $1,500 in coverage there are riders available to increase coverage. After losing my a$$ on the personal effects stolen with my boat and trailer I purchase "angler" coverage from boat u.s., I don't recall what I pay for this per year but it is not much ($50 to $100) for $5,000 in coverage. At first I thought why angler coverage? My insurance rep stated the name doesn't matter but a lot of serious fishermen purchase it to cover things like reels, rods, fish/depth finders, other electronics (what is your stereo system worth?) and even aftermarket trolling motors.

 

[Emilio22]

Reading this thread got me a bit nervous. I call Geico and I have Agreed Value and that is what they will pay minus deductible if stolen or totaled. Also insured 3K for amp and speakers and personal stuff for an addition $40/year. I have my boat at a marina 9 months a year and feel better having it covered.

 

[haknslash]

My BoatUS policy has 3k personal items coverage. I can't imagine having anywhere near that amount of personal items cost on my boat most times I'm out but I'm glad it's there should I ever need it. You can always add more but I felt that was more than enough minus those rare times I will lug all my camera gear and lenses on the boat but those are rare times and too much of a hassle/worry.

 

[Ronnie]

When my boat was stolen four tubes, over 30 life vests (mostly neoprene at $100 each), two wake boards and two knee boards and all the lines got stolen as well. None of it recovered with the stripped boat. Basically anything that is not standard equipment will not be covered for more than the standard amount of about $1k. So I came up over $2k short on those things. A little elaboration, the cost to replace a stock stereo will be covered but not the difference in cost for an upgrade, the same is true for the speakers. All amps and additional speakers won't be covered by a standard policy either. From that perspective $40 per year is a great deal. With out such coverage you could be underwater if you go to lunch and someone steals two cell phones off of your boat.

 

[Bennie]

@haknslash - $3k doesn't go as far as it used.
Start adding up cell phones, wife's purse/your wallet (and combined cash), all your life jackets, pulls, radio equipment, fenders, car keys (usually a $200-300 to replace), and any items from your guests and it adds up quick!!

We just took an inventory of our normal carry-ons and raised coverage to $7k.

 

[haknslash]

@haknslash - $3k doesn't go as far as it used.
Start adding up cell phones, wife's purse/your wallet (and combined cash), all your life jackets, pulls, radio equipment, fenders, car keys (usually a $200-300 to replace), and any items from your guests and it adds up quick!!

We just took an inventory of our normal carry-ons and raised coverage to $7k.

True. I don't want to start tallying all that up or I might get depressed

 

[Emilio22]

Actually just got an email that the additional insurance was denied. Because I have agreed value and it is more that the $3K more than the boat is "worth" they did not increase the coverage. If that wasn't the case would happily pay the $40 for the peace of mind.