Insurance- Finance Question

[Mark P]

we are looking into insurance and financing issues on prospective boats (the one in the avatar pic is for sale, hope it sells soon!). So as I was investigating various possibilities, and this question came up in my mind: If I finance a portion of the boat as part of my offer (thinking a 50% of price), and the survey shows some items that need to be fixed as a condition of financing or condition for insurance, how does that "chicken and the egg" issue get solved? I can't close on a boat I cannot get financing for, and even if I can close, I wouldn't want to take title or ownership to a boat that I cannot insure? Maybe I am thinking about this all wrong, so advice would be appreciated here. Thanks

 

[tiltrider1]

Your offer should be subject to insurance, financing and successfull survey. Once the offer is accepted, start shopping for financing, insurance and schedule a survey. If the survey shows up issues then you can either accept the boat, reject the boat or accept the boat contingent to the repairs being completed. If you are unable to find insurance or financing you will be forced to reject the boat.

 

[Comodave]

You can get prequalified for the loan. Just ask what the limits are for financing the boat, age of the boat, etc. as said make the offer contingent on survey, sea trial, financing and insurance.

 

[Pau Hana]

we are looking into insurance and financing issues on prospective boats (the one in the avatar pic is for sale, hope it sells soon!). So as I was investigating various possibilities, and this question came up in my mind: If I finance a portion of the boat as part of my offer (thinking a 50% of price), and the survey shows some items that need to be fixed as a condition of financing or condition for insurance, how does that "chicken and the egg" issue get solved? I can't close on a boat I cannot get financing for, and even if I can close, I wouldn't want to take title or ownership to a boat that I cannot insure? Maybe I am thinking about this all wrong, so advice would be appreciated here. Thanks

From the insurance standpoint, you CAN close on the vessel on time. That said, it is dependent on the severity of the punch list called the “survey recs“. Pretty much all boats will have a series of downgripes that are recorded in the survey- insuring companies are OK with having the recs complies with after closing in a reasonable amount of time.

As for financing- specially marine lenders can tell you orettymm I’mquicklynif a given boat is in their appetite for financing.

 

[Comodave]

We were sorta looking for a bigger boat so I called Cindy at Sterling Finance and asked her what the eligibility for a loan is currently. She said over 100K 20 years with 20% down and you pay the sales tax. She said they would lend back to the mid 80s as to boat age. But I think my wife has talked me out of a bigger boat, at least for now...

 

[Jeff F]

20 years on a 35 year old boat. What could possibly go wrong?

I'm reminded of this very old ad, one of my favorites.

 

[DavidM]

You asked what happens when the surveyor comes up with issues that have to be fixed to insure or finance the boat. Like Peter said, lenders rarely make fixing things a condition of financing but insurers require fixing things within a reasonable time from closing.

So if these things were unexpected, then you negotiate with the seller and try to get him to fix them or cut enough off of the price to cover fixing them. If he does and you are happy, you close. If not you walk away and get your deposit back.

Do you have a broker? Ask him how it works. If he is the listing broker he may not be all that candid about what the seller would accept.

David

 

[Mark P]

Great info, answers lots of my questions. Thank you!! I don't have broker on the buy side. Current boat is under contract, however (yeah!).

So from what I gather from the advice above, if the selling price of my (fictitious) 43 Foot Marine Tug is $100.00, I put down $4.00, financing should be no issue if the surveyor values it for at least $6.00. On the insurance side, if the survey reveals that she has a frozen seacock, rudder mount issues, and a windlass that needs attention, an insurance company would insure the boat subject to my fixing these issues in 90-120 days from closing?? If this is how it works, then I am good. What I can't have happen is that I close on this boat, and due to the frozen seacock, two hours after closing, it sinks at the dock and spills fuel all over the marina, I get a huge clean up bill - and I have no insurance.

 

[Pau Hana]

Great info, answers lots of my questions. Thank you!! I don't have broker on the buy side. Current boat is under contract, however (yeah!).

So from what I gather from the advice above, if the selling price of my (fictitious) 43 Foot Marine Tug is $100.00, I put down $4.00, financing should be no issue if the surveyor values it for at least $6.00. On the insurance side, if the survey reveals that she has a frozen seacock, rudder mount issues, and a windlass that needs attention, an insurance company would insure the boat subject to my fixing these issues in 90-120 days from closing?? If this is how it works, then I am good. What I can't have happen is that I close on this boat, and due to the frozen seacock, two hours after closing, it sinks at the dock and spills fuel all over the marina, I get a huge clean up bill - and I have no insurance.

The financing side will be determined not only on loan to value, but on creditworthiness.

On the insurance side- the survey recs are grouped into Critical/Urgent, Important, and Recommended (or similar). Insurance will be placed depending on the severity of the recs, and stipulations may be placed on the coverage.

If the recs pose significant threat to the vessel or people onboard, the insurance may require a Port Risk Only/Port Risk Ashore so the recs can be corrected prior to any underway operations. In extreme situations, insurance may require that the recs be corrected prior to coverage being placed.

If coverage is placed based on the survey, and a time period is granted to correct the recs, then you have no worries, as you would have coverage based on your exampled scenario.

 

[DavidM]

Your scenario is a little distorted and your numbers are wrong.

To correct the numbers: if you contract to buy a boat for $100 and you are willing to put down $20 and want to borrow $80, then the surveyor's valuation needs to be $100 or more to satisfy the lender. I have never seen a surveyor's valuation be a problem.

To correct the scenario: You should have insurance in place the minute that you close so you would be insured for the oil spill. Also the insurance company probably doesn't care about the windlass as it is not so much safety related. They will care about the frozen seacock and the rudder stock (leaking?) and will require expeditious fixing.

More likely insurance gripes are things like cracked hoses which present an immediate safety risk.

Often in this situation a policy is issued with a "port operations only" restriction until these issues are fixed. That means you can't take it out cruising, but must keep it in port until they are fixed. But the insurance is in place and will cover risks like a fire destroying your boat and causing an oil spill.

David

 

[Sidclark]

Your offer should be subject to insurance, financing and successfull survey. Once the offer is accepted, start shopping for financing, insurance and schedule a survey. If the survey shows up issues then you can either accept the boat, reject the boat or accept the boat contingent to the repairs being completed. If you are unable to find insurance or financing you will be forced to reject the boat.

Ok, no disrespect meant here, but this is bad advice. A seller isn't going to buy off on a contract that has financing or insurance as contingencies. That is unless the boat has been a hard sell. Why would a seller take his boat off the market and enter into an agreement when you haven't demonstrated that you can even qualify to buy the boat? Same with insurance. Let's say you have your financing and the boat's been surveyed. Now you're shopping for insurance and find out because of various reasons you decide you can't afford to insure the boat and back out of the deal. Of all the sellers I've worked with none is going to take that risk. And I will advise them not to.

So, your financing should be in place before the offer. In other words, be pre-approved. Same with insurance. Let your agent know know what your looking at and he/she can get you a ball park quote. Therefore, no surprises. The purchase agreement should have these contingencies..
1. Personal inspection acceptable to buyer
2. Survey acceptable to buyer (including mechanical)
3. Sea trial acceptable to buyer

It's a clean contract that protects both buyer and seller.

Shopping for financing and insurance after an offer is not prudent.

 

[DavidM]

Again as you say with no disrespect intended, most of what you say is BS. Financing preapproval is total BS. Anyone can go online and plug in whatever BS financial numbers they make up and get preapproved.

The rubber hits the road when you actually apply for financing and sign your name at the bottom certifying that what you say is true. It is criminal fraud to lie on that application. If you can't get financing and you have signed a contract and put down a deposit with no financing out, you are screwed particularly if you accepted the vessel after survey- you lose your deposit.

I suspect that if everyone followed your advice and signed a contract with no financing contingency, half or more of the potential buyers would walk away. The risk is too great. When I was a broker for a short while many years ago, virtually all of our contracts had a financing contingency.

David

 

[Shrew]

..... A seller isn't going to buy off on a contract that has financing or insurance as contingencies. That is unless the boat has been a hard sell.

I have to agree. You can certainly include any contingencies you want in a P&S, but the more hoops, the less likely the P&S will get signed by the seller. This is particularly the case if there are multiple offers on the table.

Financing is typically contingent on insurance. You should be getting pre-approved for finanancing prior to making an offer....if you are financing. 'Subject to Survey and Seatrial' is often sufficient. If the insurance balks at the survey, financing will also balk at lack of insurance. Therefore the vessel did not adequately pass survey which IS (Should Be) a contingency in the P&S.

 

[Pau Hana]

Your offer should be subject to insurance, financing and successfull survey. Once the offer is accepted, start shopping for financing, insurance and schedule a survey. If the survey shows up issues then you can either accept the boat, reject the boat or accept the boat contingent to the repairs being completed. If you are unable to find insurance or financing you will be forced to reject the boat.

Here in WA it is standard to include the above bolded wording in the purchase agreement. It was on the last 3 boats we purchased, and we had no problems with the seller. Also, many get approved for financing (via data, not BS numbers) so they know the financial playground they can shop in.

Each state might be different.

 

[Sidclark]

"I suspect that if everyone followed your advice and signed a contract with no financing contingency, half or more of the potential buyers would walk away. The risk is too great. When I was a broker for a short while many years ago, virtually all of our contracts had a financing contingency."

Yes, the risk is too great....for the seller. If you're out there making offers and you're not sure you can be financed you're puttin' the cart before the horse..


I've been doing this a long time and with seven figures (in dollars) in sales behind me I have never lost a buyer due to lack of a finance contingency.

So, I'm sitting in my office and a buyer walks in and says "hey, I wanna make an offer on that boat." Say its a 200k boat. When do you as a broker and a seller want to find out the guy has a 550 credit rating and 3 DWI's. Impossible to finance and insurance out the ying yang. I sell a lot of vessels out of state, so do I want to find out after I've booked travel, hotel, rental car, etc? After the survey? After I've turned away other viable buyers because the boat is under contract?

 

[firehoser75]

Not to disrespect anyone here, but I think what we are seeing is simply "different viewpoints" and maybe based on area of operation?
As a buyer you can put anything in the offer as to subject (eg. subject to approval by the Queen of England), but in a lot of those cases, the seller will not accept it.
I am sure what is acceptable will be dependent on each specific subject, and each individual seller, in that specific market. At least somewhat. However, the more subjects, especially in a "hot" market, the less likely acceptance of the offer.
As a buyer, I want the best protection I can get, and as a seller, I want as clean an offer as possible.
With all that, it behooves a potential buyer to do his/her homework prior to an offer. Find out specifics of financing as to age, type, etc. of boat and their credit rating. Same for insurance, especially as some older boats are difficult to impossible to insure. Doing that will reduce unexpected surprises for both parties.

 

[tiltrider1]

There appears to be a big difference between Florida and Washington. I can’t speak for how it’s done in Florida but in Washington I rarely see a contract that doesn't have a financing contingence. In this day an age we have more boats that fail to qualify for financing than buyers failing to qualify.

 

[tiltrider1]

Another thing to note. The boat market has been a different kind of hot this year. Methods of the past may not apply in this current Market.

 

[Mark P]

Based on my current deal (deal is done and closing should happen next week), is that smaller boats like mine (trailerable), are selling like hot cakes. My broker and the surveyor told me that while everything is selling better, the smaller boats are flying off the shelf, and bigger boats (20,000 to 40,000 lbs) are doing well, but a bit slower, and that stuff bigger than that is moving, but not affected as much by these crazy times. Now, I have to go hunting, I will be boat-less next week. Yikes....

 

[Bryant]

Insurance

we are looking into insurance and financing issues on prospective boats (the one in the avatar pic is for sale, hope it sells soon!). So as I was investigating various possibilities, and this question came up in my mind: If I finance a portion of the boat as part of my offer (thinking a 50% of price), and the survey shows some items that need to be fixed as a condition of financing or condition for insurance, how does that "chicken and the egg" issue get solved? I can't close on a boat I cannot get financing for, and even if I can close, I wouldn't want to take title or ownership to a boat that I cannot insure? Maybe I am thinking about this all wrong, so advice would be appreciated here. Thanks

If you are financing you will have to get a survey and major problems found will have to be fixed. If you are paying cash you will have to have a survey and major problems will have to be fixed prior to getting insurance. Some boats can’t be insured for more than liability so talk to your insurance company about the boat you are looking at. First rule is “Get a good Survey”.
My insurance is $2500/year but it took a lot of work and investment to get it to that level.

 

[_AJ_]

Annual yacht insurance quotes 2020

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

 

[Comodave]

We have Boat/US and are very satisfied.

 

[tiltrider1]

There is Boat Insurance and then there is Yacht Insurance. There is stated value and then there is the depreciating value. Prices of course will be very different. I recommend that you contact Peter (Pau Hana) at Novamar Insurance Group and discuss with him what type of insurance you are looking for.

 

[NWSeadog]

That is one of the things that has always bugged me. Insurance companies always like to use the term "Puget Sound". Technically Puget Sound is only the area south of Point Wilson. It does not include the San Juan Islands, Strait of Juan de Fuca, Canadian gulf islands or the inside passage to the north. I've never heard of a problem but it does leave a loop hole in the coverage. I always try to get them to at least give me a response that it also covers those areas as well. In my case I'm rarely ever in Puget Sound.

 

[Bryant]

Insurance

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

We have Geico. I have approached several different providers and each time they have told me “We can’t touch those rates”. I have an “agreed upon” amount of coverage, a non depreciating rider and extremely high spill and salvage coverage. I would definitely recommend them. Contact Heritage Insurance in Maine. They specialize in Yacht coverage and are my agents.

 

[Pau Hana]

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

Good morning, AJ,

Without seeing or knowing all of the parameters involved in quoting the presented rates, it's hard/impossible to state with any certainty whether the quotes are "good" or not. By parameters I mean:

• If the quotations are "apples to apples" with regards to coverages and deductibles
• How the insurance company credit scored you as a risk
• Your loss history
• and more

Pricing is but one parameter that denotes a policy- the rest must be based on you and your intended usage of the vessel.

That is one of the things that has always bugged me. Insurance companies always like to use the term "Puget Sound". Technically Puget Sound is only the area south of Point Wilson. It does not include the San Juan Islands, Strait of Juan de Fuca, Canadian gulf islands or the inside passage to the north. I've never heard of a problem but it does leave a loop hole in the coverage. I always try to get them to at least give me a response that it also covers those areas as well. In my case I'm rarely ever in Puget Sound.

"Puget Sound" is a generic term for the area. The actual navigation wording on the policy documents generally read as:

• "The navigable waters and tributaries of Puget Sound and the inside waters of British Columbia, including a 25 miles raduis of Cape Flattery, WA, not north of 51 degrees north latitude nor west of Cape Scott, BC."

We have Geico. I have approached several different providers and each time they have told me “We can’t touch those rates”. I have an “agreed upon” amount of coverage, a non depreciating rider and extremely high spill and salvage coverage. I would definitely recommend them. Contact Heritage Insurance in Maine. They specialize in Yacht coverage and are my agents.

GEICO can offer excellent rates and coverages- they also are very heavily data driven, so the rates they offer can also be very non-competitive.

 

[boater3]

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

Did you read the policy text of each and understand their differences? There will likely be significant differences between.

 

[boater3]

I know this thread is older but some comments:
- Surveyor report can be modified. I have asked Surveyors to remove baloney recommendations before and also add in other things that they missed. You can also ask them to categorize between major issues and other misc recommendations that don't impact the safety/seaworthiness of the vessel.
- Some lenders require survey items to be fixed some don't. It varies. Hence why its important to make sure the survey report is in good order and you understand ahead of time what will be required of you, if anything.
- Some insurance companies require seeing the survey and some don't. It varies. Same comments as a above.
- I always make sure to get insurance quote and info on what they will require before even placing an offer on a boat.
- I always make sure to get financing pre-approval and info on what they will require before even placing an offer on a boat.

Basically, you should know everything ahead of time and there should be no surprises.

 

[Portage_Bay]

If you're shopping insurance I suggest you contact Scott Richards agency in Anacortes. Richards put me with Red Shield, a smaller underwriter that specializes in the PNW market. I'm satisfied with both Richards and Red Shield.

I find making changes to the navigation boundaries as needed to be simple and straight forward. The Red Shield policy is refreshingly easy to read.

I won't post my policy price because comparing my older, lower value boat to yours makes no sense. You may find it cheaper than the bigger underwriters who have lots of exposure to hurricanes and other risks not faced in the PNW.

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

 

[BandB]

Trying to compare boat insurance prices can be a challenging task to say the least.

Not being in the insurance business, it's not always easy to compare companies and their offerings without any first hand experience.

Here in the PNW, I am getting quotes for yacht insurance for a hull value of $260k and a Tender value of 15K for the navigational area of Puget Sound.

In my case, the quotes are based on approx 30yrs experience as well as a USCG masters license which offers a slight discount.

Comparatively, here are a few quotes I've received recently. Do these look inline with what you folks are seeing. Is there a better option out there that I don't know about or should look into? Any companies to avoid?

Safeco Yacht Insurance - $2264 / yr

Markel Yacht Insurance - $1900 / yr

Travelers Yacht Insurance - $1882 / yr

Geico/BoatUS Yacht Insurance -$1585 / yr

Those quotes tell us absolutely nothing. You must look at the policy details to compare. Must know exactly what is covered and what is excluded.