All Risk vs Agreed Value: Which Yacht Insurance Is Best?

When choosing yacht insurance, the two most important policy types are **All Risk** and **Agreed Value**. Here’s the short answer: **All Risk covers almost any damage unless specifically excluded**, while **Agreed Value pays the amount you and your insurer agree on at the start — no matter what your boat is worth later**. The best choice depends on your boat’s value, how you use it, and how much risk you want to transfer to the insurer.

Understanding All Risk and Agreed Value

What is an All Risk Policy?

An All Risk policy covers your yacht for almost any type of damage, as long as it’s not specifically excluded. Common exclusions might include war, acts of terrorism, or damage from using the boat in a race unless you have special coverage. This type of policy is ideal if you want broad protection and are confident your boat is well-maintained and used responsibly.

What is an Agreed Value Policy?

An Agreed Value policy sets a specific value for your boat at the time you buy the policy. If your boat is damaged or destroyed, the insurer pays you that agreed amount — regardless of what the boat is worth at the time of the claim. This is useful if your boat is rare, has sentimental value, or you want to avoid depreciation affecting your payout.

Key Concepts in Yacht Insurance

Agreed Value vs Actual Cash Value (ACV)

Most policies use **Actual Cash Value (ACV)**, which means the payout is based on the current market value of your boat, minus depreciation. With **Agreed Value**, you and your insurer agree on a value upfront, so you won’t lose money due to depreciation. For example, if you buy a $1 million boat and agree on that value, you’ll get $1 million if it’s totaled — even if it’s only worth $800,000 after five years.

Deductibles and Excess

Every policy has a **deductible** (also called **excess**), which is the amount you pay before the insurance kicks in. For example, if your deductible is $10,000 and you have $50,000 in damage, the insurer pays $40,000. Some policies also have **named-storm deductibles**, which apply only to damage from hurricanes or tropical storms. These can be a percentage of the boat’s value, like 5% of a $1 million boat = $50,000 deductible.

Navigation Limits and Lay-Up Warranty

Most policies limit where you can operate your boat. These are called **navigation limits**. If you damage your boat outside those limits, the claim might be denied. A **lay-up warranty** is a special clause that allows you to store your boat in a dry location for a set period without losing coverage. This is important if you’re not using your boat during the off-season.

How to Choose Between All Risk and Agreed Value

Consider Your Boat’s Value

If your boat is high-value or unique, **Agreed Value** is better. It locks in the payout amount and protects you from depreciation. For example, a classic yacht worth $1 million today might be worth less in a few years due to market changes. With Agreed Value, you still get the full $1 million if it’s totaled.

Consider Your Usage

If you use your boat frequently or in different conditions, **All Risk** gives you more flexibility. It covers a wide range of incidents, including storms, collisions, and even theft. However, you must stay within navigation limits and maintain your boat properly to avoid claim denials.

Real-World Scenarios

Scenario: Damage Occurs While Outside Navigation Limits

You own a $500,000 yacht with a 5% named-storm deductible and a $20,000 general deductible. You sail into a hurricane zone, which is outside your policy’s navigation limits. Your boat is damaged for $100,000.

• Because you were outside the navigation limits, the claim is denied.
• You pay the full $100,000 out of pocket.

Scenario: Total Loss with Agreed Value

You own a $1 million classic yacht with an Agreed Value policy. After five years, the boat is worth $800,000 due to market changes. Unfortunately, it’s totaled in a storm.

• Because you have Agreed Value, the insurer pays you the full $1 million.
• If you had ACV, you would only get $800,000.

Scenario: Collision with a Dock

You own a $750,000 yacht with an All Risk policy and a $10,000 deductible. You accidentally hit a dock and cause $40,000 in damage.

• The insurer pays $30,000 after you pay the $10,000 deductible.
• If you had a named-storm deductible and the damage was from a storm, you might pay more.

Other Important Concepts to Know

Salvage and Wreck Removal

If your boat is damaged beyond repair, the insurer may take it as **salvage** and give you less than the full payout. Some policies allow you to **waive salvage rights** in exchange for the full amount. This is especially important with Agreed Value policies.

Seaworthiness and Crew Liability

Your policy may require your boat to be **seaworthy**, meaning it’s properly maintained and safe to operate. If an accident happens because the boat wasn’t seaworthy, the claim could be denied. Also, **crew liability** coverage protects you if a crew member is injured or causes damage.

Protection and Indemnity (P&I)

**P&I insurance** covers third-party liabilities, like if your boat hits another vessel or causes environmental damage. It’s often bought separately from your hull insurance and is essential for commercial or charter operations.

Tables and Typical Values

Concept	Typical Value	Example
Deductible (General)	$10,000 - $20,000	You pay $10,000 before insurance pays out
Named-Storm Deductible	5% of boat value	5% of a $1 million boat = $50,000
Navigation Limits	Coastal U.S., Europe, or specific regions	Damage outside these areas may not be covered
Salvage Waiver	Typically 10-15% of payout	Waive salvage for full payout

Final Takeaway

Choose All Risk if you want broad coverage for most incidents and stay within policy limits. Choose Agreed Value if you want a guaranteed payout and your boat is high-value or sentimental. Always read the fine print, understand your deductibles, and make sure your boat is seaworthy and operated within navigation limits. With the right policy, you can enjoy your yacht with peace of mind — no matter where the waves take you.