An important part of being a boat owner is preparing for the worst when you’re out on the water. But what are you supposed to do when disaster strikes?
Certain natural disasters like lightning and water damage from a sinking boat can result in major issues. This could include the total loss of your boat, and lead to a boat insurance claim.
What is a Total Loss? 
A total loss refers to any damage to a boat that is beyond repair or salvage. Typically, a total loss fits into one of two different categories:
- Actual Total Loss – Damage to the vessel or cargo is beyond repair.
- Constructive Total Loss – Damages to your boat are repairable but the costs for repairs are greater than the value of the vessel.
What Are My Payment Options?
How you receive payment after a total loss depends on which choice you made when you bought your boat insurance. The most common payment options include Agreed Value, Actual Cash Value and Replacement Cost.
Agreed Value
With agreed value payments, you and your insurance company agree on the true value of your boat before any losses take place. For example, if you both agree that your boat is worth $30,000 at the time you purchase your policy —even if the current value of your boat is more or less than this amount— you will receive $30,000 in a total loss situation.
Actual Cash Value
This payment option states that your insurance company will pay you the insured value or actual cash value of your boat at the time of the loss, depending on whichever is lower. For example, if the actual cash value of your boat is $35,000 this is the most you will receive under this payment option. However, if the insured value of your boat is $30,000, you will receive that amount instead of the actual cash value.
Replacement Cost
You can usually only invest in this payment option when your boat is new and it is only available during the first two or three years of the vessels lifetime. For example, if your boat is worth $45,000 brand new, you can buy a boat insurance policy with a replacement cost payment option. Then, if you file a total loss claim within the first few years, you will receive the full $45,000 payment.
Don’t get caught without the right level of protection for your boat and other watercraft! Instead, invest in total insurance protection with a comprehensive boat insurance policy today.
We've got you covered. Contact us today for a fast, free boat insurance quote.