Routine Maintenance or Added Value?

I just got off the phone with an insurance adjuster with Boat US.

My thoughts were that maybe after spending 4 years and tens of thousands of dollars rebuilding Scout that maybe I should look into raising the agreed value on my insurance policy. It due next month.

I was asked about what upgrades and started on my list. "Teak decks removed and reglassed, windows removed and replaced with new aluminum windows, new 2-part part paint topsides and hull, bottom stripped and epoxy coated.....".
At that point the underwriter interrupted me and said "sir, that's considered routine maintenance and adds nothing to the value of your boat". I said, "say what?". They repeated the bit about just being routine maintenance.
I starting laughing so hard I never got to all the system upgrades. I could barely say "I'm going to have to call you back".

I had had the exact same conversation with my broker last week.

In the last 8 months, my boat has went through a major professional refit including a repower.

My old "agreed to" value was in the midrange for my boat.

We agreed to raise the agreed to value of my boat by $140K, which is less than the total cost of the refit, but still very reasonable considering my investment in repairs and upgrades.

Perhaps you need a new insurance company.

Perhaps you need a new insurance company.

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I suspect that I am in for a new survey after I get with one of their real underwriters and not the phone answering pool. Listing all the system upgrades is going to raise lots of questions about my qualifications to do the work. If that's the case then I certainly will shop.
Right now we have an inland lakes and rivers policy that's not too bad (costly)....and luckily I've never had a claim.
I'm not looking for a policy to recover all my refit costs...just my ass.

A new survey maybe?

A surveyor has always been the one who assigned the value of our boats.

A surveyor has always been the one who assigned the value of our boats.

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I know...the last two I had done, the surveyors asked me how much I 'needed' the value to be and reported it accordingly. Gotta love the system.

Anode said:

I just got off the phone with an insurance adjuster with Boat US.

My thoughts were that maybe after spending 4 years and tens of thousands of dollars rebuilding Scout that maybe I should look into raising the agreed value on my insurance policy. It due next month.

I was asked about what upgrades and started on my list. "Teak decks removed and reglassed, windows removed and replaced with new aluminum windows, new 2-part part paint topsides and hull, bottom stripped and epoxy coated.....".
At that point the underwriter interrupted me and said "sir, that's considered routine maintenance and adds nothing to the value of your boat". I said, "say what?". They repeated the bit about just being routine maintenance.
I starting laughing so hard I never got to all the system upgrades. I could barely say "I'm going to have to call you back".

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You laughed? You thought the response was funny?

I would have been upset, possibly angry.

Of course from their point of view, what you did was just maintenance. You didn't actually add anything to the boat, you just brought it back to closer to "new" condition. It's worth more to a potential buyer since you corrected some issues that might have made it less desireable, but in general. it's now worth what "the book" says it's worth.

We are in exactly the same situation, in that we have done a lot of maintenance and upgrades on the boat over the last year. Our insurance company has said that we need a valuation survey done that will reliably tell them what the new appraised value is. I think it will probably run a couple of hundred dollars.

I think it will probably run a couple of hundred dollars.

Sure .but unlike a condition survey , you know the outcome in advance.

FF

I recently replaced my carpet with AMTICO teak and holly. While teak and holley would have been a $4K upgrade when my boat was built, I doubt my money and effort adds to the monetary value of my boat at this point. I like it, I did it for me.

Appraised value is what it is.

It is all about how the boat was maintained.

Same make same model could get you 3 or 4 different prices.

Either a new survey or market analysis should give an accurate value of worth.

In my opinion you can rebuild a boat to appraise at a true value.

After all it is all about what someone is willing to pay for what someone is willing to sell for.

SD

We are considering putting $100,000-plus into our boat to bring it up to new condition. Totally rework the hull, new engines, generator, new exterior wood where necessary, etc., etc. etc. But if we do this, the boat will be worth no more than a fiberglass 1973 Grand Banks 36 in excellent condition. Which these days is to say a bit more than $100,000 maybe. The only reason we will do this if we do is exactly what rwidman said: we want to do it for us.

To think a recreational boat of the type most of have is any sort of investment is a big mistake. We paid cash for our boat and we don't expect to get a dime out of it when our boating days are over. It's no different in this respect than buying a pair of skis or a bicycle. It's a toy and toys are not investments.

Some people say "I can sell my boat today for more than it cost new," and that's true in the number of dollars but it's not true in value. In 1998 we paid more than twice what our boat cost new in 1973. That's not because the boat increased in value in the ensuing 25 years but because the dollar decreased in value over those 25 years. At the time we bought our boat, a new GB36, which was in essence the same boat as ours albeit with many refinements, cost in the neighborhood of $300,000 equipped. There are certainly exceptions but in most cases a recreational boat is a very poor investment in terms of its value over time.

With regards to insurance you can get a new survey and hope the surveyor increases the value of the boat so you can up your coverage. But unless you've got something like a vintage Gar Wood or Hacker runabout or express cruiser, he's not going to up the value outside the envelope all boats of similar age, make, model, style etc. are in, no matter how much money, time, and effort you've put into the boat.

True words Marin.

If I was in the market for a GB.
Yours in peticular.
I would be willing to pay more than market value for your boat.
Because of this forum I know how you treat your boat and would be assured of getting a quality product.

In my opinion it is all about what someone is willing to sell something for and what a buyer is willing to pay.

I don't really want your boat.

Just sayin.
SD

Anode said:

I just got off the phone with an insurance adjuster with Boat US.

My thoughts were that maybe after spending 4 years and tens of thousands of dollars rebuilding Scout that maybe I should look into raising the agreed value on my insurance policy. It due next month.

I was asked about what upgrades and started on my list. "Teak decks removed and reglassed, windows removed and replaced with new aluminum windows, new 2-part part paint topsides and hull, bottom stripped and epoxy coated.....".
At that point the underwriter interrupted me and said "sir, that's considered routine maintenance and adds nothing to the value of your boat". I said, "say what?". They repeated the bit about just being routine maintenance.
I starting laughing so hard I never got to all the system upgrades. I could barely say "I'm going to have to call you back".

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I feel your pain as I'm going to be in the same boat (ha!) when I'm done....BUUUUUT...
Teak Decks removed might be interpreted as a downgrade over Teak deck maintenance...though you and I know what a pain it is.
Window replacement is maintenance (unless you can tell someone aluminum frames is an upgrade...I would say "maybe stainless" since aluminum frames aren't forever.
Painting topsides is definitely only maintenance (polished gel would be OK too)
Bottom stripped is maintenance..but I could argue the point that epoxy barrier coat is an upgrade...just like on a new boat,

Now...get a new survey or appraisal and that's a different story...but your premium will certainly go up to cover the increase.

Things like new systems or putting teak decking ON a boat, adding stuff that wasn't there at the last survey/evaluation would be considered upgrades.

skipperdude said:

I would be willing to pay more than market value for your boat.
Because of this forum I know how you treat your boat and would be assured of getting a quality product....I don't really want your boat.

Just sayin.
SD

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I know what you mean and you're correct--- there is an individual factor in every boat valuation that is made by the person wanting the boat. If someone wants a boat badly enough they will often be willing to up the price outside that "normal valuation" envelope. But if they do, it won't be by much unless it's a collector boat, which I don't think any of us on this forum have.

Anode I sympathize with you, but desired insured value is not the same as market value. Your boat is only worth as much as a buyer is willing to pay you. Seldom will an insurance company insure a vessel for much above market value unless it is fairly new and big ticket material upgrades were added such as dinghy, diesel heat, bridge enclosures, stabilizers etc. On our 9 year old vessel, the insurer has been very kind and kept the insured value the same as we paid for the boat new, lucky me. But, to replace the vessel in kind would cost us about 60% more today than we originally paid.

This is a lousy market in which to sell boats. Putting money into your old boat may make it more quickly saleable, but it is a crap shoot as to how much the sale value has increased due to those improvements. To me, fixing leaking decks, windows and tanks is normal maintenance. So is replacing a balky transmission, exhaust shower head and head gasket leak. Replacing a shot engine is routine stuff too unless you have maybe converted gas to diesel.

Insurance companies will not blithely (or likely) accept that $100K put into a decades old trawler will take its value up by the same amount. The surveyors out there can be badgered into assigning a higher dollar, but the "to-do" list they attach saying "conform to ABYC" can result in the insurance company saying to you "do it" prior to next year's renewal. Be careful what you ask for -----

So I'm with Marin and R Widman, do it for yourself and enjoy. Boats are toys and the value to us cannot be assigned a dollar figure.

Just for the record.

Not many know me here but those who do know I'm a realist.

I didn't buy Scout and bring her home for a 4 year refit thinking I was building the "Gem of the Sea" soon to be worth a fortune.

I love working on boats (and houses and cars and tractors and...).

At the time retirement was not far away and I was looking for a boat that I could get to the house and rebuild. Something to keep the old retired guy out of trouble kinda project. We are not new to boat projects and boat refits.

Our boat requirements were a boat that 'sleeps 2, feeds 2 and drinks 2' (maybe more by invitation). We also like certain amenities. The Sundowner Tug fit the bill. I looked at a few and made some LOW BALL offers. One day a broker called me and said 'be careful what you wish for'. His seller decided to take my offer. It was a cash deal ( I don't borrow money for toys) 'as is, where is'.

I did buy insurance and covered Scout for the purchase price. A survey was required by Boat US and the surveyor asked me up front what to value the boat at. It was substantially less than other recent sales. Everybody was happy.

Julie and I have done all the work on Scout ourselves -mostly for the love of boats and love of doing projects together.

Now...four years later, I'd like to bring the insurance coverage up to somewhere near the top of the Sundowner Tug market before I truck Scout away and splash her in the water. No more, no less.


This morning when I was asked to list the upgrades I started at the beginning - deck, glass work, paint etc. It was the interruption and the comment "that's just routine maintenance work" that made me laugh.

Like a pit bull wagging his tail as he kills your cat kinda laugh.

But Anode, the summary list you typed for TF does indeed seem like normal upkeep. What am I missing other than the proverbial and very real $$, blood, sweat and tears you honestly put into Scout?

By all means try another insurer, but remember the Surveyor's "conform to" punch list that may arise.

When we buy a boat, we want the value to be low. When we sell it, we want the value to be high.

When we brag about our boat, we want the value to be high. When it's assessed for tax purposes, we want the value to be low.

In the end, and it's been said, financially, our boat is worth what a buyer is willing to pay for it. Personally, it's worth the enjoyment it gives us.

Anode I see where you are coming from. you bought a boat that, had it been in good condition, would have cost 5 times (or whatever) what you paid for it. it is insured for what you paid. now that it is in good condition, you would like to see it insured for what you WOULD HAVE paid, had it been in good condition. It is not like you think the value should be increased by what you spent on fixing up the boat, just to what a similar boat in good condition would sell for.

Pineapple Girl said:

................It is not like you think the value should be increased by what you spent on fixing up the boat, just to what a similar boat in good condition would sell for.

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That is pretty much how it goes. The banks and insurance companies will use 'blue book' and similar references for boats of your type, age and condition based on recent sale prices. The best time to 'up' your insurance is when you have a survey done. That is when photos of the upgrades will help. What the insurance companies are trying to avoid is people insuring a boat for more than they paid and trying to make a profit on it.
Generally, the older the boat, the more resistance you will get from the insurance company.

What am I missing other than the proverbial and very real $$, blood, sweat and tears you honestly put into Scout?

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Other than the 'routine maintenance' of deck, 2-part paint topsides and hull, new aluminum windows, doors rebuilt, drive line out, new shaft coupling, drive line carrier bearings, new stern tube bearing housing, new cutlass bearings, rudder removed and rebuilt, rudder shaft bearing housing reglassed and re-bedded, new rudder cutlass bearings, teak grab rails replaced with stainless steel, new trident propane locker and safety shut off, new fresh water flush toilet, new Electra Scan, new muffler and exhaust hose complete, new plumbing through out and fixtures, new water heater, new led nav lightings, new led deck lighting, new stainless radar arch, new spotlight, new fans, new refrigerator, new separate freezer, new shower sump, new bronze windlass, new auto pilot, new radar, new plotter, new deck washdown, new cockpit shower, swim platformed removed and powder coater, new stainless boarding ladder for it, new underwater lighting, new 2700 water cooled diesel genset, new 3000 watt inverter charger, new house battery bank, additional 8 breaker BlueSea DC panel, new upholstery including foam throughout, new bilge alarm, new raw water temp alarm, new bonding system and galvanic isolator, all thru-hulls removed and new thru-hulls and seacocks for below water line, above waterline rebuilt and replaced, interior finished, two hatches added to pilot house, new headliners throughout, dinghy davits, new freshwater pump, bilge and sump pumps, all hoses replaced, bottom sanded to glass and epoxy coated probably nothing.

Hey...I didn't say it couldn't be insured for more...get together with your insurance co. and ask them if a surveyor of their choice will give a higher agreed upon value...I'm sure they will...my agent (friend) knows all I'm doing to my boat. He said make sure we add your other dingy and all the work you just did. Because of him, I may not have to go the survey route...but he seemed to think raising the insured value was no problem.

Anode having seen your photo's of Scout's restoration I think it is one of the few boats around that you could realistically say 'it's better than new', any good surveyor would recognise that, the same way as any decent surveyor would recognise a run down , delapidated wreck that may have been Scout's sister ship once. I guess that somewhere someone has set down the price range from best to worst for your boat based on an 'agreed' value for the boat rather than replacement value.

FWIW, I think Scout probably sits at the very top of that price range, and it's a credit to you both for what you have achieved. What really impressed me from your restoration photo's was that you had his & her Fein tools, now that's a true partnership.

Apparently, yacht brokers think like insurance companies so there must be something to it. I have my boat listed with a broker for sale. I am also making some modifications and improvements because if the boat don't sell, we are still going cruising inland anyway, even if we do it with the sailboat.
My broker keeps reminding me that I wont see much, if any, extra money in the sale of the boat. The nicer the boat looks will definitely help make the sale, but probably wont bring in any more money. My boat is a 1976 model and in very good condition, however, it's age pretty well determines it's value.

Hey Andy G - Thank you very much for the kind words. They are very much appreciated. It has been a long journey and a lot of fun along the way.
psneed - No problemo my friend. I have no doubt that Scout will get insured for an appropriate amount. It not...it has little if any impact on my financial well being.

Thanks everyone for your input.

Anode

That is a very impressive body of work. I'd guess that a written copy of the list accompamied by a survey (if needed) should easily raise your insured value.

Good job.

Travelers insurance is covering my 48lrc for agreed price.

I had to send pictures in detail and my current survey to renew insurance last year. Travelers had insured based on my purchase price bit got nervous once I finally got it to California. Once they saw current pictures I had no problem getting what I wanted. What we are seeing around here with older boats as insurance required survey's to renew existing policy's.

What a great thread, I was considering calling the insurance company this week!

Hey Anode, Just saw the link and read your Blog. Scout was lucky to find you and the Admiral. Very well done!

rwidman said:

In the end, and it's been said, financially, our boat is worth what a buyer is willing to pay for it. Personally, it's worth the enjoyment it gives us.

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well said.