When you purchase boat or yacht insurance, one of the main components — alongside liability protection — is coverage for replacing the boat itself if something happens to it.

Many marine policies use agreed value for this. If you’re new to boating, or if you’re not sure your vessel has the right coverage, keep reading. We’ll explain how agreed hull value works and how to best make sure you’re properly covered if the worst happens.

Agreed Hull Value vs. Actual Replacement Cost

You may have two options when insuring your boat or yacht: agreed hull value or actual replacement cost (sometimes known as market value). If the vessel sinks or is otherwise totally lost, this is the amount you receive in a claim, less your deductible.

Agreed hull value (AHV) is a vessel’s worth decided at the time the policy is written. Typically, a third-party surveyor is involved to help set the value. However, if the boat or yacht is new, the purchase price may be the agreed hull value.

Actual replacement cost (ARC) is what the boat is worth at the time of loss. This can be more or less than what you paid for it, based on the market at the time.

What Are the Advantages of Agreed Hull Value?

Many boating and yachting enthusiasts prefer agreed hull value. Insurance carriers also like this method of valuation. Everyone is on the same page, and you know what you will receive should the unexpected occur. There is no need to figure depreciation into the claim.

The only downside to agreed hull value is that your premiums can be slightly more to offset the possibility of depreciation at the time a claim is filed. However, most vessel owners feel that paying more for insurance is worth it. They don’t have to worry about their craft being undervalued or about being underinsured.

Do You Need New or Updated Coverage for Your Vessel?

Have you recently purchased a boat or yacht? Has it been a while since you wrote your vessel’s policy, and you’ve added new engines or made improvements? Do you want to switch from actual replacement cost to agreed hull value?

Our Marine Division at Davidson & Associates Insurance is happy to assist you. We can also review all your other insurance coverage for your vessel, like liability and emergency assistance, to ensure you’re properly covered.

Call our team at 360-514-9550 to get your questions answered. You can also start a marine policy anytime online right here on our website.