Actual Cash Value (ACV)
A policy valuation method that pays the depreciated market value of your yacht at the time of loss, not the original purchase price or agreed value.
How It Works
ACV policies calculate payouts as: Replacement cost - Depreciation. The insurer determines what your yacht is worth on the current market, accounting for age, condition, and market trends. This amount is paid in a total loss claim (minus deductible).
Example
You bought a yacht for $300,000 five years ago. Market depreciation and wear mean similar yachts now sell for $200,000. If your yacht is totaled, an ACV policy pays approximately $200,000 (minus deductible), even though you paid $300,000.
The distinction is quiet but decisive: an agreed value protects the number you settled on, while actual cash value tracks the market as it moves beneath you.
Key Considerations
- Lower premiums: ACV policies cost 10-20% less than agreed value
- Depreciation risk: Payout decreases over time
- Financing issues: May not cover your outstanding loan balance