AAIS BT 4800 AGREED VALUE SETTLEMENT PROVISION

(July, 2018)

This form is to accommodate boats that have an appreciating value that may only be acceptable for an insurer to protect according to an agreed value.

Example: Kelly Twinstar owns a 1985, 22-foot Coronado Cardel with a V8 Mercury Cruiser engine. It belonged to her father and he passed along his love of the boat to Kelly. Regular market value should be about $22,000. It is in such immaculate shape, with low hours use. A qualified appraiser studied the boat and, as a result, her insurer accepted the documentation and insured it on a Boatowner Policy with the BT 4800 form for $37,500.

Normally, boats suffer significant depreciation in the first few years and then, value may stay quite stable for a decade or longer. Value depends on the market’s desire for the type and use of craft, its availability and, naturally, with how well it is maintained. When a craft checks enough boxes, it becomes a piece of property that may appreciate in value over a number of years.

BT 4800–Agreed Value Settlement Provision form helps both the insurance company and the craft owner. It secures a higher amount of coverage for the person who owns property that defies depreciation because of property care and attributes. It benefits the insurance company by securing additional premium while creating a value ceiling in the event of loss to that insured property.

The form begins with a schedule where up to three boats may be listed along with the following, key identifying information:

• Year
• Manufacturer
• Model
• Type
• Length
• Serial Number

Using this form, the boat policy’s actual cash value is replaced for the property that is listed in the schedule. Below are the replacing terms.

LOSS SETTLEMENT TERMS

1. Total Loss

Total losses are settled by paying the applicable policy limit (that amount selected and shown in the endorsement schedule. Any payment for a total loss to covered property is net of (reduced) by the value of salvage.

2. Partial Loss Which You Repair or Replace

Partial losses are settled based on a determination of the cost to repair or replace the damaged property. Reasonableness includes consideration of current customary repair practices and manufacturer specifications.

For a partial loss, the insurer’s payment is limited to the least expensive option among the limit appearing in the form’s schedule for that property, the replacement cost value of the damaged part or the cost of making the repair or replacement with material with the same type and quality. When the latter option is used, the work must be done according to acceptable practices or according to the manner specified by the manufacturer.

ACV settlement is also used for several specified property items (regardless whether involved in a total or partial loss) including motors, upholstery, carpet, canvas, sails, rigging, boating equipment and other property.

3. Other Loss Which You Do NOT Repair Or Replace

For a partial loss involving property in which no replacement or repair is made, the insurer’s payment is limited. The insurer will use the least expensive option among the limit appearing in the form’s schedule for that property, the replacement cost value of the damaged part or the cost of making the repair or replacement with material with the same type and quality. When the latter option is used, the work must be done according to acceptable practices or according to the manner specified by the manufacturer.

4. Loss to All Other Property

Separate settlement circumstances also apply to any loss involving boat trailers, motors, boating equipment, outdrives, jet drives, carpeting, sails and canvas, rigging and upholstery. Losses to this property, the insurer will use the least expensive option among the limit appearing in the form’s schedule for that property, the replacement cost value of the damaged part or the cost of making the repair or replacement with material with the same type and quality. When the latter option is used, the work must be done according to acceptable practices or according to the manner specified by the manufacturer.