The Core Difference
When your yacht is declared a total loss, how much does your insurance company pay you? The answer depends entirely on whether your policy uses agreed value or actual cash value (ACV).
The bottom line
With agreed value, you and your insurer agree upfront on your yacht's worth. With ACV, they pay the depreciated value at the time of loss—which can be well below what you paid or still owe.
Side-by-Side Comparison
| Factor | Agreed Value | Actual Cash Value (ACV) |
|---|---|---|
| How it works | You and insurer agree on value when policy starts | Insurer determines depreciated value at time of loss |
| Total loss payout | Full agreed amount (many policies waive the hull deductible on a total loss) | Market value at the time of loss (reflects depreciation) |
| Predictability | You know the total-loss figure in advance | Payout uncertain until claim |
| Depreciation | None on the total-loss figure; some items may still be depreciated on partial losses | Yes — payout falls as the yacht ages |
| Premium cost | Typically higher (gap varies by insurer and yacht) | Lower |
| Financed yachts | Many lenders require or prefer this | Often insufficient to cover loan |
Real-World Example: Total Loss After 3 Years
You purchased a yacht 3 years ago for $500,000. A hurricane sinks it. Here's what each policy type pays:
Agreed Value Policy
$500,000 agreed value set 3 years ago
The figure agreed at inception, not a depreciated one
Actual Cash Value Policy
Illustrative: market value down 30% over 3 years
$142,500 less than agreed value policy
Both columns deduct a 5% deductible to keep the comparison like-for-like. In practice, many agreed-value yacht policies waive the hull deductible on a total loss; depending on the wording, a named-storm deductible may still apply to a hurricane loss. Check your declarations and loss-settlement clause.
Financing impact
If you still owe $400,000 on your yacht loan, the ACV policy leaves you $67,500 short ($400,000 loan − $332,500 payout). You're responsible for paying the lender the difference—and you no longer have a yacht.
Which Should You Choose?
Choose Agreed Value If:
- You have a loan: Lenders typically require hull cover at least equal to the loan, and many require or prefer agreed value to protect their collateral
- Your yacht is relatively new: Depreciation hasn't significantly reduced value yet
- You want certainty: You'll know the figure a covered total loss is settled on
- You've made significant upgrades: Electronics, rigging, engines—agreed value captures these improvements
- You couldn't afford to absorb a loss: The extra premium may be worth the peace of mind
Consider ACV If:
- Your yacht is older: Much of the depreciation has already occurred, so the gap between an ACV payout and a realistic agreed value is smaller
- It's fully paid off: No lender requirement for agreed value
- You have cash reserves: You can handle a lower payout and aren't relying on insurance to replace the yacht
- Premium savings matter more: You're prioritizing lower annual costs
Industry standard
Agreed value is the usual basis for yacht hull cover. Major yacht insurers build their standard yacht policies around an agreed value for total loss, and typically offer ACV as a way to reduce premium, often on older or lower-value boats.
How Is Agreed Value Determined?
When you apply for agreed value coverage, the insurer evaluates:
- Purchase price: What you paid (if recent)
- Marine survey: A professional surveyor's condition and valuation report (often required for older or higher-value yachts; thresholds vary by insurer)
- Comparable sales: Similar yachts sold recently
- Condition and upgrades: Maintenance records, recent refits, equipment additions
- Year, make, model: Standard valuation guides (such as BUC and J.D. Power, formerly NADA)
The insurer may adjust your requested value up or down based on these factors. Once agreed upon, this value is locked in for the policy term (usually 1 year).
Annual review
At each renewal, you can ask to adjust the agreed value, subject to the insurer's agreement. If you've added $50K in new electronics or engines, ask to increase the value. If the market has declined, you might reduce it to lower your premium.
What About Partial Losses?
For partial damage (repairable claims), agreed value and ACV policies are closer together—but not identical:
- Both typically pay reasonable repair costs minus your deductible
- Many agreed value policies still apply depreciation to wear items—commonly sails, canvas, upholstery, and sometimes outboards, engines, or batteries—so check the wording
- ACV policies more often deduct depreciation on replaced parts generally, which can widen the gap on the same repair
The biggest difference shows up in total loss scenarios, where the yacht is lost outright or repair would cost more than the policy's total-loss test allows. There is no universal percentage: each policy sets its own test (for example, repair costs exceeding the agreed value), and the classic marine rule treats a vessel as a constructive total loss when repair would cost more than it would be worth once repaired.
Frequently Asked Questions
Can I switch from ACV to agreed value mid-year?
Typically, no. You'll need to wait until your policy renewal. However, if you recently purchased the yacht or completed major upgrades, some insurers allow mid-term endorsements. Contact your broker to discuss options.
What if I disagree with the insurer's agreed value offer?
Provide additional documentation: a recent marine survey, comparable sales listings, or upgrade receipts. If the insurer won't budge and you believe your yacht is worth more, you can seek coverage from a different carrier or accept a lower agreed value to reduce premium.
Do I get the full agreed value even if the yacht wasn't worth that much?
Yes—that's the point of agreed value. If you and the insurer agreed on $500,000, but the yacht's true market value was only $450,000, you still receive $500,000 (less any deductible that applies) in a covered total loss. The protection depends on the value having been fairly presented: insurers verify value at policy inception, and a figure obtained through misrepresentation can put the whole policy at risk.
How much more expensive is agreed value coverage?
Agreed value premiums are typically higher than equivalent ACV premiums, but there is no standard percentage—the gap depends on the insurer, the yacht's age and value, and where it's kept. The only reliable way to know is to get both bases quoted on the same yacht.
Can I over-insure my yacht with agreed value?
Not in practice. The agreed value is an underwriting decision: insurers set it from surveys, purchase records, and comparables, and generally won't agree a figure they can't support. Once agreed, it binds both sides in a covered total loss—which is why the process matters. Marine insurance requires utmost good faith, so misrepresenting price, condition, or value to inflate the figure can let the insurer void the policy, and a deliberate scheme to profit from a loss is fraud.