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Boat Insurance Glossary

Illustration of a Boat Insurance Glossary


Actual Cash Value (ACV)

The value an item would sell for on the open market. Policies that pay ACV will have lower premiums than those that pay Replacement Cash Value (RCV).

Agreed Value

The amount agreed upon by you and your insurer that you would be paid in the event of a total loss.

Blue Water

Water that is five or more miles from land.

Brown Water

Water that is less than five miles from land.

Date Restrictions

If you only plan to use your boat during certain times of the year, you can save on insurance premiums by placing date restrictions on your policy that specify the time periods that the boat is covered.


The amount that you will pay out-of-pocket for a loss before your insurance policy will pay.


Reduction in property’s value over time. Depreciation is taken into account when calculating an item’s actual cash value.


A small boat, often carried by a larger boat.

Disappearing Deductible

A deductible that decreases by a percentage every year that no claims are filed.

Emergency Services

With regards to boat insurance, this is coverage for recovering a sunken boat or towing a disabled vessel.


A document that modifies the coverage provided by an insurance policy; often referred to as a rider.


Those things that are specified in an insurance policy as not covered. “Acts of war” is a common example.

Hurricane Deductibles

Under some policies, damage due to hurricanes may be covered with a higher deductible than other losses.

Latent Defect

A manufacturing defect that was undetectable by the insured using normal testing methods.

Lay Up Dates

Times during which a vessel is required by the insurance policy to be unused, although coverage is still effective.


Legal responsibility for an occurance.


The maximum dollar amounts that a policy will pay for a covered incident.

Navigational Limits

Limits specified in a policy defining where you can use your boat and still be covered.


Those who will operate the boat.

Personal Watercraft (PWC)

A small, water jet-powered vessel that the rider either sits on or straddles while riding.

Pollution Liability Coverage

Sometimes called fuel spill coverage, this covers containment and cleanup costs resulting from a fuel or oil spill.

Replacement Cash Value (RCV)

The cost to replace a covered item with a new one, regardless of the item’s age. Policies that pay RCV, unlike actual cash value (ACV), do not consider depreciation.


A rider modifies an insurance policy’s coverage in some way and is considered part of the original policy.


The likelihood of a covered event occurring.

Salvage Coverage

Not included in all boat policies, salvage coverage covers major incidents requiring rescuing or salvaging a boat. Sinking or running aground are two examples of such events.

Total Loss Replacement

Coverage that will pay to replace a boat with a new one of the same make and model in the event of a total loss.