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When buying a boat you have to take into account insurance, storage, maintenance and other factors that must be considered when tallying the total cost of owning a boat. Yachts are known for their elegance, performance, and luxury. As a member of a yacht club, one instantly realizes that ensuring this type of watercraft requires certain knowledge and an understanding of exactly what type of coverage is needed to protect them.
The issue of boat insurance in California doesn’t have to be all that complicated, but a smart owner can hopefully make the right choices with a few solid tips. Options include having boat insurance added on to your homeowners’ policy, but we strongly recommend you either purchase it from an independent insurance agent or buy directly from a marine insurance specialist.
Agreed value versus actual cash value
There are two main choices for boat insurance and depreciation is what sets them apart. An agreed value policy costs more up front but it potentially pays more (it will cover the stated value of the policy in the event of a total loss). For example, a total loss on a $50,000 agreed value policy would pay $50,000. Most importantly, with a partial loss an agreed value policy replaces damaged boating equipment on a new and old basis with no depreciation.
Actual Cash Value policies cost less but only pay up to the actual cash value at the time the boat or property was lost (depreciation is factored in on all losses). Actual Cash Value policies are better suited to less expensive boats or to situations where the concern is with liability protection and defense against lawsuits rather than any actual damage to the boat.
If the worst happens and the boat needs to be salvaged, make sure that the policy covers salvage costs up to 100% of the boats insured value. If it covers anything less, salvage costs may become an out-of-pocket expense.
Unfortunately, many homeowners and some marine insurer policies limit salvage coverage to a percentage of the boats total value.
Mooring your boat in Southern California means having a different set of needs than someone living in northern Maine, or in one of the hurricane belts in the US. Make sure the coverage you buy fits your situation. Don’t treat boat insurance in California like other insurance, meaning if the policy doesn’t make sense, ask for an explanation.