What is the difference between agreed value and market value in boat insurance?

Posted by Yacht Secure on August 27th, 2016

Boat insurance is a policy that protects your boat from any possible damages when you take your boat in the water. This policy just works like your automobile insurance policy and you can claim the damages caused by any natural or unnatural factors and are eligible for the compensation on account of the damages.

Basically boat insurance is been done on the basis of boat height, length engine and weight. There are two different boat insurance pollicises available. First one is the “Agreed value” policy and other one is the “market value” policy. When you are buying a boat insurance policy, then you need to choose one from either of the options. There are many people who are not clear about both these terms and therefore could not able to do the right selection.

Policy with “Agreed Value”

The boat insurance policy with “Agreed Value” is the policy in which both the parties i.e. the insurance company and the customer agreed on a single amount for the compensation on damages. Here, we are talking about the 100% damage that means if you have taken your boat in an ocean or river and suddenly hit by thunderstorm and soon your boat got sink under the water and left with nothing. In this case it would be considered 100% loos of the asset. It is not necessary that damage should be caused in the ocean, river or any water body; even if your boat gets completely destroyed in fire in your backyard then you are still entitled for receiving 100% compensation on your boat.

Under the “Agreed Value” insurance policy, the boat owner is entitled to get the fixed amount of compensation for the boat on account of 100% loss of the asset. The agreed amount depends on the valuation of the boat done by the insurance company at the time of policy. They take the boat model, boat length, boat make and boat engine to determine the estimated amount of the valuation.

Policy with “Market Value”

In the boat insurance policy with “Market Value”, the boat owner is entitled to get the compensation based on the current market value of the boat. For example, you are having a boat model 2014 worth ,000 and the current market value of the boat after depreciation is ,000, then you are entitled to get ,000 as compensation for the loss of your boat. Some boat owners prefer the agreed value if their boat is brand new, while some prefer the “market value” if their boat is way too old.

About the Author:

This article is written by Yachtsecure.eu Team. Yachtsecure.eu is your provider for Yacht insurances. Yacht Secure is far less known that there is also a variety of insurance options for the skipper and the crew for damage and/or injury cases.