Learn How to Find the Right Boat Insurance Coverage
What Losses are Insured Due to Physical Damage?
Repairs to your yacht caused by a wide variety of risks are typically covered by physical damage policies. The finest policies offer “all-risk” protection, which ensures that losses from any cause are compensated for as long as they are not prohibited in the policy.
Weather-related risks like as wind, rain, hail, lightning, and wave action; fire; loss or damage due to theft or vandalism; and collisions with piers, submerged or floating items, or other boats are all examples of the kinds of events that would trigger coverage. Picking a policy that won’t void out if your boat is hauled on a trailer or parked on dry ground is a bad idea.
Normal wear and tear, which is the owner’s responsibility to address, is typically not covered by a boat or yacht policy. It’s important to shop around because different providers have different physical damage exclusion policies.
Agreement Value vs. Real Cash Value in Loss Settlement
When comparing boat or yacht insurance policies, the most important distinction is whether physical damage coverage is based on “Agreed Value” or “Actual Cash Value” (ACV) loss payment. If the boat is declared a total loss, the agreed value coverage will typically pay the stated sum.
To put it another way, physical depreciation will not be incorporated into the value of the lost or damaged objects; instead, they will be compensated for at their replacement cost (new for old) minus your deductible under a policy of this type.
Canvas, sails, trailers, and some types of machinery, on the other hand, are subject to greater quantities of natural wear and tear and may be subject to the allowance for depreciation in the case of a covered loss. Compared to an Agreed Value policy, the premium for an Actual Cash Value plan is typically lower, but the amount of coverage it offers is significantly smaller.
If the vessel is totally destroyed, an ACV policy will pay out up to the ship’s actual cash worth (ACV), which takes into account depreciation and other considerations. Partial loss payments are typically lowered by the deductible and the physical depreciation of the lost or damaged objects. Find out what kind of insurance coverage best fits your needs with the advice of a licensed agent.
