Is Your Ontario Boat Protected with Agreed Value or Actual Cash Value?
Should you choose agreed value or actual cash value to protect your Ontario boat in the case of a total loss when you’re buying boat insurance? Did you know? The age of your boat is an important factor and can help determine whether you choose agreed value or actual cash value coverage.
You’ll need to understand the difference between agreed value and actual cash value and decide what coverage gives you the most peace of mind as an Ontario boat owner.
Western Financial Group, a 100% Canadian company, can help you navigate boat, car, home, and business insurance during this period of economic uncertainty.
What is agreed value when it comes to Ontario boat insurance?
If you choose an agreed value policy, your Ontario boat insurance provider agrees to honour the value of the boat at the time the boat policy was written. For example, you buy a new boat for $50,000 and you insure it for that value. That is the amount you can expect to receive if you have a total loss.
Here’s what you need to know: Agreed value coverage is generally more expensive than actual cash value (ACV) coverage.
How does my Ontario boat’s age figure in agreed value coverage?
There is usually a time limit for agreed value coverage. Agreed value boat insurance coverage typically ends when your Ontario boat reaches 15-25 years old, but this can vary depending on the insurer and the specific boat. Check the specifics of your Ontario boat insurance policy.
What is actual cash value (ACV)?
Actual cash coverage covers you for the value of your Ontario boat at the time of loss, less depreciation. An actual cash value policy provides less coverage than an agreed value policy, but generally at a lower cost.
How does my Ontario boat’s age figure in actual cash value coverage?
Note that depreciation, damage, and wear and tear are factored into the actual cash value you will receive. As boats age, insurers are less likely to offer agreed value policies due to difficulty setting a fixed value, so ACV is sometimes the only option for boats 15 years or older.
Boat insurers in Ontario may require a professional survey or inspection for boats older than 15 years to confirm their condition.
Let Western Financial Group protect you and your crew with insurance for your boat in Ontario.
Comparing agreed value versus actual cash value in Ontario boat insurance coverage
Pros of agreed value coverage for your boat
- An agreed value policy gives you peace of mind because the limit that is on your Ontario boat insurance policy is the amount that you are insured for after a total loss.
- Normally the value that is agreed upon will be the purchase price of your boat.
- Parts are replaced with new-for-old without considering depreciation. That means the only amount you pay is your boat insurance deductible.
Cons of agreed value coverage
- An agreed value policy for your Ontario boat is more expensive than an actual cash value policy
- An agreed value policy may have a specific age limit for your boat.
- This kind of coverage isn’t usually available for sport and high-performance boats.
Pros of actual cash value for your boat
- Actual cash value coverage is less expensive than agreed value coverage
- As your Ontario boat ages, your marine insurance provider may insist on an actual cash value policy but it will cost less.
Cons of actual cash value
- An actual cash value policy only pays up to the value of the boat at the time the boat was a total loss, factoring in depreciation, wear and tear, and current market conditions.
- Actual cash value coverage may not offer sufficient coverage if your personal belongings are stolen or damaged on your boat.
Note that older boats typically qualify only for actual cash value (ACV) policies when there’s a total loss. Agreed value coverage is usually for newer or very well-maintained boats in the case of a total loss.
What other factors influence the choice between actual cash value and agreed value?
Age and value of your Ontario boat
Older boats typically qualify only for ACV policies. Ontario boat insurance providers can find it difficult to set a fixed value for older boats. As a result, ACV becomes the default for boats once they are 15 to 25 years old.
ACV policies pay out based on current market value, factoring in depreciation due to age, wear, and demand.
Agreed value policies pay a predetermined amount regardless of depreciation, which is attractive if you want predictable coverage or own a boat that does not depreciate in line with comparable models.
Marine survey
To get agreed value coverage, especially for older or high-value boats, insurers typically require a current marine survey to document the vessel’s condition and justify the agreed amount.
Upgrades and customization
If your Ontario boat has significant upgrades or custom features, agreed value policies can better protect these improvements if documented and included in the insured value. ACV policies may not include the full worth of customizations unless specifically added and supported by valuation.
Your risk tolerance
Choose ACV if you are comfortable with lower payouts and want to keep your Ontario boat insurance cost lower.
Choose agreed value for greater peace of mind in the event of a major loss.
Did you know? An all-risk boat policy provides comprehensive coverage for a wide range of potential losses, except those specifically excluded in the policy. Ask your Western Financial Group Ontario boat insurance expert about an all-risk boat policy.
In conclusion
The age of your Ontario boat is a determining factor when choosing between agreed cash value (ACV) and agreed value in your boat insurance. Do your research to find your comfort limit when protecting your boat in the event of a total loss.
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5 FAQs
How much does boat insurance cost in Ontario?
Premiums for boat insurance vary based on the age, type, size, value, and condition of your boat. Your boating experience, claims history, and coverage that you want are also factors. Discounts may be available for boating safety courses. You can get an Ontario boat insurance quote from Western Financial Group.
Should I spend a lot of money on insuring an old boat?
Boats older than 15 years have significantly lower market values due to depreciation. With an Actual Cash Value (ACV) policy, your insurance payout in the event of a total loss will be capped at your boat’s current value, which is often quite modest for older vessels. But ACV coverage does cost less than agree value coverage. You can discuss the pros and cons of ACV and agreed value with a Western Financial Group boat Ontario insurance expert.
If I have an old boat, should I even bother getting boat insurance?
Even if your old Ontario boat has little market value, boat liability insurance can protect you financially if you accidentally injure someone, cause property damage, or create environmental hazards on the water. In many cases, Ontario marinas or local regulations require a minimum level of liability coverage to dock, launch, or store your boat. Fire or theft can still cause unexpected expenses or inconveniences even if the boat is old. Insurance minimizes the risk of sudden large out-of-pocket expenses. Even for an old boat, it can provide peace of mind.
Why do old boats keep their value?
Generally, boats 25 years or older that have historical significance, craftsmanship, especially mahogany wooden boats, or distinctive features tend to retain or increase in value, especially when they are restored properly and get routine maintenance.
What makes classic wooden boats more valuable than fiberglass boats?
Classic wooden boats are generally more valuable than fiberglass ones primarily due to their craftsmanship, rarity, and historical significance. A properly maintained wooden boat can last 60 to 100 years or more and retain its beauty and structural integrity. This contributes to its collectible status. While a fiberglass boat is more durable, it lacks the same level of historic character or craftsmanship compared to a wooden boat.
