Total Loss vs. Partial Loss
Part of being a responsible boat owner includes staying informed about the important aspects of your boat insurance coverage. Learning the definitions of and differences between total and partial loss, as well as agreed value and actual value policies is vital in selecting the best watercraft insurance coverage for you.
Total loss occurs when damage to a vessel or cargo is beyond repair or salvage. Total loss can be divided into two different categories: Actual and Constructive. Actual total loss occurs when your vessel or cargo is damaged beyond repair. Constructive total loss occurs when the vessel or cargo can be repaired, but costs for such a repair exceed the value of the vessel or cargo itself.
A partial loss to your vessel occurs when damage occurs that can be repaired, such as a minor collision with another boat or dock, or running aground.
Agreed vs. Actual Value
Payment following a claim depends on whether your policy is based on Agreed Value or Actual Value. Actual Value factors in depreciation at the time of the claim, while Agreed Value policies set a value for the vessel or cargo at the time the policy was made. An Agreed Value policy is agreed upon by both the insurance agency and the insured.
For example, a boat owner purchases his vessel for $50,000. His vessel later founders, rendering an actual total loss. At the time of the accident, his vessel was valued at $35,000. With an Actual Value policy, he would then receive $35,000 following his claim. Had he gotten an Agreed Value policy from his insurance agency, he would have been given the full $50,000 he originally paid for his vessel. Global Marine Insurance Agency typically grants Agreed Value policies.
Global Marine and our team of award winning underwriters are dedicated to providing comprehensive liability insurance for boats and boat owners. For more information regarding boat insurance rates or policies, please access our knowledge base or contact customer service. Ready to cruise into the sunset? Start with your boat insurance online quote today!