Boats are like cars, and that's the reason they depreciate in value. But to help Ontario boaters save money, insurers have come up with what they call ''agreed value'' or ''Market value'' in the event of a total loss. Agreed value should serve as a sticker price while market value should come in where depreciation of value is concerned.
In the event that your boat was damaged after using it for some time, you would be compensated based on the market value. This means that you'd receive enough money to replace the current value of the boat at the time of its destruction. Therefore, if you bought a 2004 model for instance, you would not receive enough cash to allow you get the latest model in 2016. Ideally, you'd only receive what is sufficient enough to buy you another 2004 model.
On the other hand, agreed value is basically an agreement where the insurer and the insured agree on the value of the boat upfront. So when something happens to your boat, you will be paid the sum agreed.
Does an insurance policy cover a boat when out of water?
When a boat is attached to a vehicle, it is covered by the auto policy of that particular vehicle. However, the bad thing is that the vessel is only covered by the auto policy and the limits contained therein. An auto policy with this provision will never cover an injury, loss of life, or property damage when the vessel is being transported on land.
On the other hand, your homeowners insurance will cover your vessel when parked within your compound or premises. However, it may not stretch beyond this limit. Think about not being compensated for vandalism or stolen contents of the boat.
To cut a long story short, experts now advice getting an umbrella policy. This policy fills whichever gap that is left behind by the two policies. This ensures that you're completely covered in the event of a risk. After all, when you acquire a boat, it's not an asset. Instead, it's another risk which demands insurance, and the only way to give yourself a peace of mind is by covering it.