Storm Damaged Boats, Part 3: Buying from Liquidators

boat-repair2
Disasters for some, storm damaged boats can be an opportunity for others. Liquidators have thousands of boats in various conditions looking for new owners

This is the last part of a three-article series. Read the first two parts here:

Storm-Damaged Boats, Part 1
Storm-Damaged Boats, Part 2

What happens to storm damaged boats after an insurance company declares the boat a total loss? They go to a liquidator, whose job it is to get whatever remaining value is left, at auction. You can buy these boats and sometimes, if you are capable and patient, get a fabulous deal.

Much like buying a house that is a fixer-upper, buying a boat with known damage and repairing it can result in owning a good boat, at below-market costs—but you’ll need to be prepared for the work, frustrations, and risks. There are three national liquidators who routinely work with BoatUS’s Catastrophe team after big storms like Sandy or Katrina. They are:

Liquidators often provide multiple services in finding storm damaged boats new owners. First, they may act as transporters to get the boat to a storage facility. Then, they may act like brokers, posting ads and facilitating sales. They will also provide a clear title to the boat’s new owner. Remember, they work on behalf of the insurance companies to recoup losses, but they work to move inventory quickly and legally.

You may see some of these same brokers/liquidators representing boats on this site, too, or you may click on their Internet sites shown above for all their listings. If you find a boat you are interested in purchasing from one of these liquidators, you’ll want to do the following things:

  • Find out the value of the boat in good condition.
  • Arrange to view the boat, which typically requires signing a waiver.
  • Hire a qualified marine surveyor to review the boat and give you insight on repair estimates.
  • If you choose to proceed with the purchase, you’ll have to put in a bid at auction.

Many liquidators run simple phone auctions that might take a week or so to resolve, but they are incentivized to move forward quickly as they make a percentage of the sale price only when the boat sells. They also charge some nominal fees for processing the paperwork and transferring title. They may also make money if you hire them to transport the vessel to your designated locale after the sale.

Buying a boat with known damage is usually straightforward, but the buyer needs to be prepared for unseen or unknown damage which may reveal itself during the course of repair. I suggest finding a reputable boatyard to effect the repairs. Documentation that the repair was done professionally should settle any prospective buyer’s concerns down the road when it is time to resell. I also suggest having a contingency budget for those unknowns as part of your overall approach. Buying a storm-damaged boat will take some effort, risk, and investment, but can result in owning a good boat.

To read part 1 and 2 of my storm-damaged boat series click below.

Storm Damaged Boats—Part 1

atlantic highlands marina
BoatUS estimates that 15%, or 25,000, of all registered boats in New Jersey, like this one at Atlantic Highlands Marina, were damaged by Hurricane Sandy.

It’s Christmas week and a storm front is moving through the Northeast with torrential rains and 60 mile-per-hour wind gusts, reminding me of my colleague Brett Becker’s story “Flooded Boats Can Offer Good Value.” With today’s storm and major storms like Hurricane Sandy becoming more destructive, more information seems to be needed on storm-damaged boats. I’ve written briefly on the topic before with my own “How to Get Rid of An Old Boat.”

I  contacted a marine surveyor acquaintance of mine, David Wiggin, who often ends up working for insurance companies on behalf of their clients in the aftermath of such storms. I met David years ago when I was the operations manager at a large boatyard. As a member of BoatUS’s Catastrophe response team or CAT, David has seen the worst that nature can dish out over the past twenty years. He just returned from six and a half weeks of surveying damage from Hurrican Sandy and said simply, “It was the worst damage I’ve ever seen, with thousands of boats a total loss.” Click here for a video of the BoatUS CAT Team in action after Hurricane Sandy.

Before you consider buying a storm-damaged boat, it’s worth knowing something about how insurance claims processes work after big weather events. I spoke to BoatUS’s D. Scott Croft, AVP of Public Relations, for some perspective.

“We estimate that there were over 65,000 boats total, both insured and uninsured, damaged in New York and New Jersey alone from Hurricane Sandy,” said Croft. “In a storm like this, a boat we insured may be under a pile of boats we don’t have policies for. Job one is to get all the boats out of the weeds or intersections and off to the repair yards to be evaluated. Often additional damage can happen when you’re salvaging a boat.”

BoatUS sells only marine insurance. Their CAT team of surveyors, claims administrators, and logistics, salvage and trucking people, is often involved in recovery and salvage beyond the immediate needs of their clients. For instance, they put together a salvage plan for all of the 400-plus boats damaged at Atlantic Highlands Marina in New Jersey.

“Many people don’t read the fine print on their policies and don’t understand the value of the policy until a catastrophe like this hits,” says Croft. “There is an agreed value on the policy but also a salvage value on the policy. The first is the maximum value to be paid for damage, but often there are costs associated with salvage that take away from the agreed value. We pride ourselves in handling the entire claims process, from emergency response to what happens after.”

To follow this saga of what happens to storm damaged boats, where the total loss boats go, and how you might purchase one, stay tuned for my future blogs.