Guest editor Robert Loudon of the insurance industry is going to be filling us in on some insurance questions we have been asking him, as well as generally rounding out the blogs content. Be sure to ask Rob any questions (except for asking for quotes!) All postings are wholly independent of his employer.
Physical Damage Just as car insurance offers collision and comprehensive coverages for damage to your auto, hull insurance provides coverage for physical damage to your boat, regardless of fault.
Nonetheless, as with car insurance, the details of hull coverage vary among both policies and carriers. First and foremost, in the unfortunate event of a total loss, there are several general methods for valuing the boat:
· Actual Cash Value (“ACV”)
· Replacement Cost Value (“RCV”)
· Agreed Value
Actual Cash Value ACV is essentially the market value of the boat. The insurance carrier will determine ACV for the boat through guides and comparable boat listings.
Replacement Cost Value RCV provides sufficient value to replace the total loss with a new boat. Given the moral hazard implicit in this method, this valuation generally must be selected upon purchase of the boat as new, with some grace period. Also, there is usually a time limit of several years after which the valuation reverts to ACV or Agreed Value. Details will vary by policy, so ask your agent.
Agreed Value Perhaps the easiest method, the policy specifies the agreed value of the boat prior to the loss. Regardless of actual value or cost to replace, the agreed value is what the insurance carrier will pay for the total loss.
Depending on the age and value of your boat, the insurance carriers available, and your financial situation, you have many options to insure your boat against physical damage. However, the foregoing is general information and does not constitute professional opinion or advice. Consult a local insurance agent to address your unique needs. This is the first in a series on boat insurance.