Should You Purchase Sailboat Insurance for Agreed Value or Market Value?
Sailboat insurance isn’t something you would overlook having, but do you know the details of your plan? Reading through your policy is essential since it provides you with a better understanding of what amount of coverage is actually available to you. One key area to consider is whether or not you have agreed value or market value coverage. This detail could become very important if you have to file a claim for a total loss of your sailboat.
What is Agreed Value and Market Value in Boat Insurance?
Consider car value for a moment. When you purchase a brand new car for $20,000, you assume that you can turn around and sell that car for $20,000. However, that’s not the case. Once you drive it off the lot, the value of the car depreciates. It’s no longer new. It’s used and that reduces the value. The same is true for a boat. Once you get it from the dealership, the value begins to drop.
In an effort to help you to save money on boat insurance premiums if you have an older boat, many insurance companies offer agreed value policies. This policy is based on the “sticker” price of your boat. By comparison, some policies are market value. The difference here is that market value policies will pay out at the value of the boat right now, at the depreciated value.
Now let’s consider what happens if you are in an accident and the boat becomes a total loss. You may still have a loan on that boat for the purchase price. However, if the market value of the boat is no longer as high as when you purchased it and you have a market value insurance policy, you may not get enough to finish paying off the loan. It may be in your best interest to choose agreed value if possible, unless you know your boat has a lower value and you want the lowest cost possible.
Sailboat insurance should provide you with enough coverage to allow you to replace the watercraft should it be a loss to you. Agreed value tends to be the better option for many boat owners, but for some, market value can be a better option for cost savings. Which is right for you? That depends on your boat and the type of coverage you desire.
Need to cover your sailboat? Call Casey Insurance Group at (888) 537-1412 for more information on Miami boat insurance.