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Imagine your yacht catches fire in its slip and is declared a total loss. You bought it three years ago for $400,000, and you have insured it on a yacht insurance standard policy ever since. The carrier writes you a check for $290,000 — the depreciated value of the boat at the time of the loss — and tells you that is what the policy actually owed. The $110,000 gap between what you paid for the yacht and what the carrier paid you is the difference between an Agreed Value policy and an Actual Cash Value (ACV) policy. For most yacht owners, that gap is the single most important decision in the entire policy.
This post walks through the difference between Agreed Value and ACV settlements, why the standard for boats is one and the standard for yachts is the other, and how to decide which is right for your specific vessel.
Actual Cash Value is the depreciated value of your yacht at the time of a covered loss. The carrier looks at the original cost, subtracts depreciation for age, condition, and use, and pays out the resulting number — minus the deductible.
ACV is the default settlement basis on most personal auto policies and on a lot of standard recreational boat policies. It works well for assets that depreciate predictably, where a loss settlement based on current market value is roughly fair to both sides. The problem with applying ACV to yachts is that yacht depreciation is messy. Some yachts (well-maintained, popular models) hold value extraordinarily well. Others depreciate sharply. Custom and limited-production yachts may have no comparable market data at all. When a real claim hits, the depreciation argument becomes the central fight — and the owner is usually negotiating from a worse position than the carrier.
Agreed Value coverage locks in a specific dollar settlement amount upfront. You and the carrier agree, at the time the policy is bound, that the insured value of the yacht is, say, $400,000. If the yacht is later declared a total loss from a covered cause, the carrier pays $400,000 minus the deductible — full stop. No depreciation argument. No comparable-sales debate. No appraiser fight.
Agreed Value is the standard settlement basis on yacht-form policies for a reason. It eliminates the most contentious part of a total-loss claim, gives the owner certainty about what they will receive, and aligns the underwriting incentive with the owner's actual exposure. A yacht-form policy quote that does not include Agreed Value as the standard offering should be a red flag.
The split exists because the two boat types are different products built around different buyer expectations.
A 22-foot bowrider treated as a recreational toy is an asset that depreciates predictably and is easily replaced. ACV settlement on the bowrider works because the owner understands the boat will be worth less in three years, the market for replacement boats is liquid, and the policy is rated for a relatively simple risk profile. The carrier prices ACV cheaply because the depreciation argument actually protects them on the back end of the policy.
A 50-foot yacht is a different category of asset. The owner often picked the boat specifically because they wanted that yacht, not a generic equivalent. Replacement is harder. Custom equipment, electronics packages, refits, and onboard upgrades may add real value that does not show up in a generic depreciation table. And the loss is usually significantly more disruptive — a totaled yacht is often a totaled vacation home, a totaled charter business, or a totaled multi-year project. Agreed Value reflects all of that. The carrier prices it slightly higher than the equivalent ACV would cost, but the owner gets certainty in exchange.
A common misconception is that Agreed Value is meaningfully more expensive than ACV. In practice, on a yacht-form policy with a properly underwritten survey, the premium difference is often quite modest — frequently in the range of 5% to 15% on top of the ACV premium. Given that the difference at claim time can be $50,000, $100,000, or more, the math is almost always in favor of Agreed Value for any yacht where the owner cares about a specific replacement outcome.
The reason the premium difference is small is that carriers underwrite Agreed Value carefully. They require a current marine survey, they ask for documentation of the current vessel condition, and they verify that the agreed amount reflects a defensible value. That process protects the carrier from over-insuring an asset that has been allowed to deteriorate, which is the main risk with Agreed Value coverage from the carrier's perspective.
Three things typically need to be in place before a carrier will write Agreed Value:
A current marine survey — usually within the past 12 to 24 months for vessels over a certain age or value. The survey establishes the condition, equipment, and reasonable value of the yacht. Newer yachts may not require a survey if the carrier is comfortable with the build and documentation.
Proof of value — bill of sale, recent appraisal, or comparable-sale data for similar vessels. The "agreed" amount has to be defensible.
Documented condition standards — well-maintained vessels with current systems, proper survey corrections, and reasonable upkeep records. Carriers will not Agreed Value a yacht with major deferred maintenance.
If the carrier comes back with a lower agreed value than you wanted, that is a useful signal — they are telling you what they think the boat is actually worth. Sometimes the right answer is to negotiate. Sometimes the right answer is to address survey items first.
There are narrow situations where ACV makes sense even on a yacht:
For most yacht owners, none of these apply, and Agreed Value is the right call.
Three situations where the conversation gets more complicated:
Custom and limited-production yachts. When there is no public market for direct comparables, the agreed value has to be built up from documented build cost, equipment lists, and any reasonable depreciation. This is exactly the situation Agreed Value is designed for — there is no honest way to settle these on ACV at all.
Major refits. A yacht that has just had a $200,000 systems and electronics refit needs the agreed value updated to reflect that investment. Many carriers will adjust mid-policy if you provide documentation. Letting that lapse is leaving real money exposed.
Classic and antique yachts. These are often appraised on a specialty basis, with separate considerations for materials, original equipment, and restoration value. Carriers that write classic yachts have their own underwriting framework.
If your yacht is:
When Sun Coast quotes a yacht, Agreed Value is the default starting point. If ACV is the right call for your specific situation, we will tell you that — but for most yacht owners, the small premium difference is worth the certainty at claim time.
For more on yacht coverage generally, see our overview of yacht insurance.
