Marine Insurance Terminology

What do all the terms in your policy mean? Be sure to refer to our tips for marine insurance as well. Also, note that this is only a generic summary. The terms and conditions of your policy will take precedence.

Agreed Value

The Agreed Value is the fair market value of the vessel that is agreed upon between the insured and the insurance carrier. Under Agreed Value policies, if there is a total loss, then the full agreed value is paid without any depreciation. When there is a partial loss, the company will replace old equipment with new to bring the vessel back to its’ condition prior to the loss.


The deductible is the portion of a loss that is the responsibility of the insured. There is an inverse relationship between deductible and premium. The higher the deductible, the lower the premium. The hull deductible is typically 1% of the hull value. Credits up to fifteen percent of the hull premium are available for higher deductibles. Lower deductibles are assigned for specific equipment such as personal property, electronics, and dinghies. These lower deductibles are separated from the hull deductible, and therefore, reduce your exposure to a loss.


Typical broad exclusions include dishonest, intentional, and illegal acts, fraud, wars, seizures, and nuclear radiation. The marine exclusions include wear and tear, deterioration, corrosion, osmosis, electrolysis, or design defects. Check with your agent for a full list of exclusions that apply to your specific policy.

Lay-up Warranty

A lay-up period defines the months that the vessel is out of active service. During the lay-up period the vessel is out of commission and is not used for any boating activities. In New England, the typical lay-up period is from November 1st to April 1st. Credits are available for longer lay-up periods.

Medical payments

Provides coverage for medical, ambulance, and hospital costs should someone be injured while boarding, leaving, or upon your vessel.

Navigational Warranty

The policy defines the navigational limitations by a navigational warranty that specifies dates and geographic locations. For instance, a navigational warranty may limit navigation north of Cape Hatteras, North Carolina during the hurricane months of June 1st to November 1st.

Pleasure Use Warranty

If a policy is written for a pleasure craft then it is subject to a pleasure use warranty which means he vessel may not be chartered. Charter endorsements are available to broaden coverage for commercial purposes.

Protection and Indemnity

This is the liability portion of the marine policy. Typical limits range from $100,000 up to $1 million or more. Protection and Indemnity will cover you if you are sued for negligence, causing damage to another vessel, or injury to an individual. It provides protection for property or personal injury damages to someone other than yourself or a family member. Under the private pleasure policy, it is not subject to a deductible.

Uninsured Boaters

The uninsured boaters portion of the policy provides accidental bodily injury protection for injuries caused by an uninsured boater.

Seaworthiness Warranty

The seaworthiness warranty requires that the vessel be maintained in a seaworthy condition at all times. This means the vessel must be in good repair so that the vessel will not be damaged by the normal rigors of the sea.

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