If you submit a claim for damage to your yacht, your yacht insurance adjuster will determine if it is a total or partial loss claim.

Liability Coverage

Note: When your boat or yacht insurance policy coverage includes liability, sometimes called protection and indemnity, that’s what covers you if you injure or kill another person (the third party) or their property while operating your boat.

Hull Coverage

The hull coverage includes the physical components of the boat. It is helpful when there is damage to your boat, its hull, any contents, the engine, or other machinery.

If your yacht insurance policy offers “all-risk” coverage, then it doesn’t matter if the loss is due to a storm, fire, theft, vandalism, collision or other accident. Pay attention to any specific exclusions, for instance, if coverage continues while you store the vessel, transport it by land, or travel outside your region.

Determining Partial or Total Loss

The appraiser will consider the scope of the damage. Then, taking into consideration how much the yacht was worth before it was damaged, the appraiser will weigh the cost of making repairs against the actual cash value. 

In a case where repairs would cost more than the value of the yacht, you’ll likely have a total loss claim. If repairs are feasible, then it would result in a partial loss claim.

What’s Next

Regardless you will need to pay any deductible, according to the terms of your existing yacht insurance policy. 

If your yacht is deemed a total loss, the next consideration is whether your coverage is based upon an Agreed Value or an Actual Cash Value settlement. This is a significant distinction.

Agreed Value vs. Actual Cash Value Boat or Yacht Insurance

If your policy’s coverage is Agreed Value and the vessel is considered a total loss, there will be a pre-determined amount paid. The amount is independent of replacement costs. Partial losses are usually covered (less deductible), and depreciation factors.

An Actual Cash Value policy, in contrast, pays total loss or partial loss (less deductible) based on current market value, given the depreciation. 

Not sure how to determine which type of policy is right for you? Talk it over with the yacht insurance professionals at Global Marine Insurance Agency, so you make an informed decision.