Buying Boat Insurance? Get a Survey

When purchasing or researching the purchase of a pre-owned yacht it is very important to know exactly what you are buying. The best way to find out for sure the actual condition of a yacht is through a professional Society of Accredited Marine Surveyors (SAMS) or National Association of Marine Surveyors (NAMS) condition and value survey. Most major yacht insurance companies require surveys at ten years of age for salt water vessels and fifteen years for fresh-water vessels. It is important to note surveys are generally only required on yachts, which are defined as vessels twenty-seven feet or more in length.

Most insurance companies will require a survey on used boats before they will provide coverage.
Most insurance companies will require a survey on used boats before they will provide coverage.

As a requirement for securing insurance, the underwriters will review the survey looking for conditions that need to be repaired noted as “Recommendations”. Many surveyors prioritize those repairs in order of their importance in relation to seaworthiness. Insurance companies will require these “Recommendations” be cleared/repaired within 30- 60 days from the date they bind coverage. If they do not receive written confirmation they may stipulate the boat be put on Port Risk Only coverage, which means the vessel cannot be operated. More critical recommendations may need to be remedied prior to obtaining insurance, or may completely disqualify the vessel from being insured.

Here’s what the underwriter is looking for:

Condition Issues

  • Potential electrical issues include non-marine grade modifications, frayed wire, improper ground protection, unprotected electrical leads, and corrosion.
  • Elevated moisture levels in the hull, stringers or bulkheads.
  • Fuel leaks, fuel line condition and proper hose clamping
  • Overall condition of the vessel. Has it led a tough life? Was it a previous salt water vessel? Has it been well maintained? Answers to these questions can allude to hidden defects that may not be found by a surveyor without a deconstructive inspection.
  • Does the vessel have operating bilge pumps and necessary safety equipment?

Valuation assessment

  • Is the surveyed value in line with your purchase price?
  • What sources were used to determine the value? Buc Book, Nada Guide, ABOS or comparables for sale in the market place?
  • Research for comparables.

It is important to note, even if your vessel surveys for a value greater than your purchase price, most insurance carriers will still require the vessel to be insured at a value no greater than your total monetary investment. Insurance is intended to indemnify, or to make the insured party financially “whole” again, not better off than prior to the loss or claim.

Insurance companies are also are concerned with who commissioned the survey. If the survey was done for the seller or yacht broker, the surveyor may be more inclined to offer an inflated valuation or to overlook certain condition issues.

Who should perform the survey?

Insurance companies and lenders typically prefer surveys performed by a SAMS or NAMS surveyor, but may accept surveys from a seasoned marine surveyor without one of these accreditations.