Catamaran Insurance: Agreed Value vs Actual Cash Value

How Agreed Value and Actual Cash Value Work

Under an agreed value policy, you and the underwriter agree at inception on a fixed insured value for your catamaran. If the vessel is declared a constructive or actual total loss, you receive that agreed amount — no depreciation, no argument about market conditions, no appraisal fight after the fact. Partial losses are typically settled at the cost of repair up to the agreed value, subject to your deductible.

Under an actual cash value (ACV) policy, the insurer pays the fair market value of the vessel at the time of loss, less depreciation and less your deductible. For a five-year-old performance cruising catamaran that has held its value well, the market value and your purchase price may not be far apart. For a ten-year-old boat with soft furnishings, electronics, and sails that have aged, the ACV settlement can be materially lower than what you expect — or what your lender requires.

Most specialist underwriters writing catamaran hull and machinery cover in the Florida and Caribbean market offer agreed value as the default for vessels above a certain length and value threshold. ACV policies still exist, typically on older or lower-value boats, and they carry lower premiums — but that premium saving is a contingent liability, not a guaranteed benefit. You are effectively self-insuring the depreciation gap.

Why Valuation Hits Catamarans Differently

Catamarans occupy a peculiar position in the marine insurance market. New production cruising cats from established builders have appreciated sharply over recent years, meaning the replacement cost of your vessel may now exceed what you paid for it. If your agreed value was set at purchase and has not been reviewed at renewal, you could be underinsured even on an agreed value policy. Your broker should be asking the underwriter at every renewal whether the insured value still reflects current replacement cost or a current market appraisal.

On the other side, custom or semi-custom performance catamarans — particularly older carbon-fiber racing designs or liveaboard builds — can be difficult to value because there is no deep secondary market. An ACV settlement on one of these boats can be almost arbitrary, because 'market value' is hard to establish. Agreed value removes that ambiguity entirely.

Catamarans also present a higher salvage and total-loss exposure than comparable monohulls. A cat that goes hard aground on a Bahamian bank or a reef in the Turks and Caicos is harder and more expensive to refloat. Salvage costs can consume a large portion of the hull value before the underwriter even begins to assess repair costs, which is why your sue-and-labour clause — the provision that covers reasonable costs you incur to prevent or minimize a loss — needs to be clearly written and your insured value needs to be realistic.

Named Storm Deductibles and How Valuation Interacts With Them

Florida-based catamarans face named storm deductibles that are applied as a percentage of the insured hull value during the Atlantic hurricane season, which runs June 1 through November 30. On an agreed value policy, the deductible calculation is straightforward: the percentage applies to the agreed value you set at inception. On an ACV policy, the deductible percentage applies to whatever the insurer determines the vessel was worth at the time of the storm — which may be lower than you assumed, and which compounds the underinsurance problem.

Your hurricane plan is directly tied to your insured value and your navigation limits. Most underwriters require you to move the vessel to a named safe harbor or haul out within a specified window after a named storm watch or warning is issued for your area. If your catamaran is on the hard in a boatyard in Fort Lauderdale or Coconut Grove, the named storm deductible may be reduced compared to a vessel left in the water. The exact terms vary by policy and underwriter — this is a specific question your broker should be pressing at placement, not something to read for the first time after a storm.

If your catamaran is on a marine mortgage, your lender will almost certainly require agreed value cover and will specify a minimum insured value, often tied to the outstanding loan balance. An ACV policy will typically not satisfy a lender's loss payee requirements. Confirm this with your lender before you accept any renewal quote that has quietly shifted your valuation basis.

What to Check on Your Current Policy

Pull your current declarations page and look for the words 'agreed value,' 'agreed amount,' or 'hull insured value' alongside a fixed dollar figure. If you see language like 'actual cash value,' 'market value at time of loss,' or 'less depreciation,' you are on an ACV form. If the language is ambiguous, ask your broker for the full policy wording — not just the declarations — and look at the loss settlement clause.

Check whether your agreed value has been updated since you first placed the policy. A value set three or four years ago on a production cruising catamaran may be materially below current replacement cost. Underinsurance on an agreed value policy does not trigger an ACV adjustment, but it does mean a total loss settlement leaves a gap between your payout and what you need to replace the vessel.

Review your navigation limits alongside your valuation. Many Florida-based catamaran policies include the Bahamas and the Caribbean as standard cruising grounds, but some restrict coverage to the Gulf of Mexico or the US East Coast without an endorsement. If your agreed value is set correctly but your navigation limits exclude where you actually sail, you may have no cover at all for a loss in those waters — regardless of valuation basis.

• Confirm the exact words used in the loss settlement clause — 'agreed value' or 'actual cash value'
• Verify the insured value reflects current market or replacement cost, not your original purchase price
• Check that your lender's loss payee requirements are satisfied by the policy form
• Confirm named storm deductible percentage and the conditions that trigger it
• Review navigation limits to ensure the Bahamas, Eastern Caribbean, and Gulf coast are included
• Confirm your hurricane plan requirements and any haul-out credits available

Charter Use, Crew, and How Valuation Affects Your Whole Program

If you operate your catamaran under a bareboat or crewed charter arrangement — even occasional charters through a management company in the BVI or the Bahamas — your hull and machinery policy needs a charter endorsement. Some underwriters will write charter cover only on an agreed value basis, because the commercial use increases the exposure and they want the insured value to be fixed and defensible at claim time. If you are chartering and your policy is ACV, you may find that the charter endorsement is unavailable or that a claim triggers a valuation dispute at the worst possible moment.

Crew cover under MLC 2006 (the Maritime Labour Convention) applies to vessels operating commercially with employed crew. If your catamaran has a paid captain or crew, your protection and indemnity (P&I) cover needs to address crew injury, repatriation, and medical expenses. The interaction between your P&I limits, your hull agreed value, and any general average contribution your vessel might owe is a program-level question, not just a hull question. General average — the principle under which all parties to a maritime venture share in losses incurred for the common safety, governed by the York-Antwerp Rules — can produce a contribution demand against your hull value. On an agreed value policy, that contribution is calculated against a known, fixed number.

When you come to renewal, bring your broker a current survey or appraisal if your vessel is more than three years old or if market values in your class have moved significantly. Underwriters writing catamaran hull cover in the specialist market will want to see a recent out-of-water survey for vessels above a certain age, and the survey value is the most defensible basis for setting your agreed value. A survey that supports a higher agreed value also protects you against being forced into an ACV settlement by a valuation dispute.

Frequently asked questions

Do I need agreed value cover if my catamaran is paid off and I have no lender?

You are not legally required to carry agreed value cover without a lender, but it is still the right choice for most catamaran owners. ACV policies expose you to a depreciation deduction at the worst possible time — after a total loss. For a production cruising catamaran that has held or increased its value, the difference between an agreed value settlement and an ACV settlement can be substantial. The premium difference between the two forms is usually modest relative to the exposure you are accepting with ACV.

What happens if my agreed value is lower than what it would cost to replace my catamaran today?

You receive the agreed value — no more. If replacement cost has risen above your insured value, you bear the gap. This is why reviewing your agreed value at every renewal matters, particularly for production cruising catamarans where new-build prices have moved. Ask your broker to compare your current agreed value against recent sales data or a current appraisal before you renew.

How does the named storm deductible apply to an agreed value policy?

The named storm deductible is calculated as a percentage of your agreed hull value. If a named storm causes damage to your catamaran, you pay that percentage before the insurer contributes to the repair cost. The deductible applies per named storm event, not per policy year. Your hurricane plan — where the vessel is located when the storm hits and whether it is hauled out — can affect the deductible percentage. Confirm the exact trigger conditions and any haul-out credits with your broker at placement.

What do I need to provide to get a quote for catamaran hull cover?

At minimum: the vessel's year, builder, model, length overall, and current agreed or insured value; your homeport and intended cruising grounds (including whether you cruise the Bahamas, Eastern Caribbean, or Gulf coast); whether the vessel is used for charter; the name and credentials of any paid captain or crew; your loss history for the past five years; and a copy of your most recent out-of-water survey. If your survey is more than three years old, a current survey will strengthen your placement and support the agreed value you want to set.

Does my policy cover salvage costs if my catamaran goes aground in the Bahamas?

Salvage costs are typically covered under your hull and machinery policy up to the agreed value, subject to your deductible, provided the salvage operation was reasonable and necessary to prevent or minimize a covered loss. This is the sue-and-labour principle built into most hull forms. However, if the salvage cost plus repair cost exceeds the agreed value, the underwriter may declare a constructive total loss and settle at the agreed value rather than fund a repair that exceeds it. Knowing your agreed value is realistic relative to salvage exposure in remote cruising grounds is part of setting the right insured value.

How long does it take to bind catamaran hull cover?

For a straightforward placement — a production cruising catamaran with a current survey, a clean loss record, standard cruising grounds, and no charter use — cover can typically be bound within a few business days of receiving complete information. More complex placements, such as older vessels, custom builds, charter operations, or extended offshore passages, take longer because the underwriter may require additional documentation or a surveyor's report. Do not leave renewal to the last week before your current policy expires, and never let your policy lapse between the end of April and June 1 when the Atlantic hurricane season begins.