Agreed Value vs. Actual Cash Value: What is the best coverage for your boat or camper?

Do you have a boat and/or camper insured (or that needs to be insured)?  Do you know what type of value it is insured for?  You might want to look at your most recent declaration page to see how it is currently covered.

Boats and campers are typically insured one of two ways - either Actual Cash Value (ACV) or Agreed Value (AV).  What is the difference?

• Agreed Value (AV):  Agreed Value means that if we have a boat insured for $10,000, and it is determined to be a total loss in a covered claim, the insurance company would pay the agreed value of $10,000.
• Actual Cash Value (ACV):  ACV pays up to the amount an item is insured for, but the insurance company determines the value.   An insurance company might use NADA and comparables to look up the value of a boat or camper.  With the same example above, the insurance company might determine (after looking at NADA and comparables) that the value is $8,000 so they pay $8,000 if the boat was determined to be a total loss in a covered claim.  

Agreed Value is better coverage, and since the values of boats and campers can be all over the place we recommend changing to Agreed Value coverage.  We have had issues where a client has felt that their camper is worth more than NADA and comparables show - Agreed Value coverage fixes this problem when there is a total loss.  If you would like to discuss how changing from Actual Cash Value to Agreed Value could affect your insurance policy, contact Absolute Insurance today by emailing us at service@insaia.com or calling us at (515)279-2722.

For more information on insuring your boat, check out our Boat Insurance page.

Replacement Cost vs Actual Cash Value - What Does it Mean?

Have you ever looked at your homeowners, condo, or renters policy and saw that your property, belongings, and/or roof is listed as being insured for Replacement Cost Value (RCV) or Actual Cost Value (ACV)?  Have you ever wondered what that means?

Replacement Cost (RCV) is the value to replace an item at today's cost.
Actual Cash Value (ACV) is the value for a similar item at today's cost minus depreciation (replacement cost minus depreciation).

What does this mean?  Let's use an example most people have in their house - a couch.  Four years ago when you moved into your house, you purchased a new sectional for $2500.  Last month, your sectional couch was damaged in a covered claim.  

• If you have actual cash value coverage, the insurance company would pay the value of the couch today (replacement cost minus depreciation).  In this example, they might determine that after 4 years of use, your sectional is only valued at $1800.
• If you have Replacement Cost coverage, the insurance company will pay what it could cost to buy a similar couch today.  The sectional you purchased 4 years ago might now be $2600 so they would pay that amount. (Some insurance companies will give you the actual cash value of an item and require a receipt for the new item before paying you the remainder)

What does it mean by depreciation?  Over time, your home, contents, and/or roof may lose value due to factors such as age and wear and tear.  This loss in value is commonly known as depreciation.  

RCV and ACV also affect how your roof is insured too.  Some companies only offer RCV coverage for roofs if they were installed within the last 15 years, otherwise, the roof is covered for ACV.  

Here are some important things you can do:

1. Look over your Homeowners, Condo, or Renter's Insurance policy to see what coverages are listed for your policy
2. On your Homeowners policy, make sure that we have the most recent roof year listed for your home
3. Take an inventory of your items in your home, and update annually.  It is recommended to take a video of each room, including in your closets and cupboards.  This will help in the event of a house claim.

If you have any questions regarding the coverage on your policy, please contact your Absolute Insurance agent today at 515-279-2722 or at service@insaia.com.

You can find more information about Homeowner's Insurance coverage at https://www.insaia.com/home_insurance.php


You can also click here for a quote on your Homeowners Insurance.