Agreed Value vs. Actual Cash Value
This is one of the biggest decisions boat owners make when selecting a watercraft insurance policy. It’s important to understand the difference since it has a direct impact on how claims are paid if your vessel is totaled.
If you choose Agreed Value, then you will be reimbursed for what your vessel was worth when you bought your policy, regardless of the current market value. This is typically closer to the replacement cost.
If you choose Actual Cash Value, then the policy will pay up to the current market value of the vessel at the time of the total loss, less depreciation and other factors. This typically results in a payment less than what it will cost to replace your craft. However, your insurance cost is generally lower than with Agreed Value.
Your World advisor will discuss these options in detail so you can make the best decision for your needs.
Usage Restrictions
Watercraft insurance policies typically restrict coverage based on specific usage scenarios, such as navigational limits (geographic areas), commercial activities, racing, speed, and vessel storage periods. Additional common exclusions include negligence, lack of maintenance, wear and tear, animal damage, illegal activities, war/terrorism, and operation by unauthorized individuals.
Strict adherence to your insurance policy definitions and restrictions is required for coverage. When in doubt, speak with your World advisor to ensure you are following your policy correctly. Your watercraft insurance policy is valuable protection when properly applied.
Navigation Limits
When your watercraft insurance policy is issued, it will include navigation limits based on your vessel type, size, and location. This allows the insurance company to control their risk and will let you know where you can and cannot take your insured watercraft.
Certain waters are known for their rough conditions, piracy, or limited access to emergency services, which can increase the likelihood of insurance claims. If you sail outside your designated zone—even by just a few miles—you could be denied coverage for accidents, theft, or damage until you return within the limits.
Some common navigation limits include port risk afloat or ashore, coastal boundaries, regional constraints, and seasonal restrictions. In certain situations, you may be able to purchase a navigational extension to temporarily extend your coverage area.
All of these factors play a role in what your policy will cost and in your eligibility in general. Your World advisor can answer your questions and help you properly insure your watercraft.
Hurricane-Related Requirements
Watercraft insurance policies typically have hurricane requirements that mandate a formal, documented “hurricane preparedness plan,” including specific hauling-out, pre-storm deadlines, and securing protocols.
Boat insurers often impose separate higher “named storm” deductibles (e.g., 5-25% of the insured value) and prohibit buying or modifying policies once a storm watch or warning is in effect. If you only have liability boat insurance, any storm-related damage to your watercraft will not be covered.
Following these requirements is important to ensure your policy is in good standing and your claims are paid. Your World advisor can help you through this process.