Why is it important to know the value of your boat?
Importance of boat values
It’s that glorious time again and the summer of 2023 is looking like a great boating season. Boat owners are getting busy with a variety of tasks to ready their vessels for the spring and summer boating seasons. Along with de-winterizing their boats, boat owners should also sharpen their pencils: chances are good their boat’s value has changed since the last insurance policy renewal.
Times they are still a-changing: supply chain issues
Practically every aspect of the boating industry is still at the mercy of a variety of shortages, whether it be raw materials, replacement parts, or employee/labour shortages that are slowing down production. But the good news is that the supply and demand has eased up a bit.
It is good to understand where the boat market is going. According to reports from Coast Guard and NMMA:
Wholesale shipments of new powerboats through July 2022 decreased 6% over the previous year.
Used boat sales are outpacing new boat sales by 2-to-1.
Over 400,000 first-time boat buyers entered the market in 2021.
An estimated 110 million North Americans go boating each year.
61% of boaters have an annual household income of less than $75,000.
95% of boats sold in North America are American made.
95% of boats in the U.S. are less than 26 feet and trailerable.
Repairs and parts supply
After all the issues and fall out from Covid 19 we are now seeing how inflation has been driving up costs. Parts are now a more expensive, precious, and rare commodity fought over by the furniture, mattress, auto, and marine industries. If a boat owner has to replace the foam seating due to damage from fire, rodents, or vandalism, it’s going to cost more than it did a few years ago. If the boat owner’s current insurance policy hasn’t caught up to the price of foam for seating and the many other parts required in the event of a total replacement, boat owners will be losing out. This is where those sharpened pencils come in.
Talk to your broker about your boat value
Rola Nasser,VP Quebec of Pacific Marine Underwriters has some advice for boat owners and insurance brokers alike for determining a boat’s value:
“ Getting your boat evaluated should include verifying the current market value for the boat and what would be the current replacement cost in case of a total loss. This will involve checking parts availability in case of a claim, what would be the potential increase in value on these parts and labour costs due to a claim, and how this can influence the total claim payout vs the vessel value stated on the policy declaration page. And we can’t forget to add the taxes to the boat’s value, too.”
A good broker will be up to speed on the ever-changing landscape that the boating industry is navigating including boat value, and Rola says:
“Brokers need to advise their clients of the potential change in their boat value and help prepare them for upcoming renewals. Brokers should recommend to clients an additional increase in values, varying from 15-20%, even without verifying the above, covering in part the inflation factor.”
Nowadays, to be a smart boat owner, one has to become well-versed in parts, raw materials, production, shortages, and logistics in addition to achieving a high-level understanding of safety equipment and basic navigation on board. Long story short: now we really have to care about seat foam among other things that may be required to fix or repair a boat.
Claims examiner, Ian Donald of Coast Claims Insurance Services breaks down the Pandemic causes and effects on the boating industry, and provides an almost startling number that should be considered when updating the value of a boat :
“THE COVID EFFECT! With the global shutdown experienced at the beginning of Covid, we have seen two effects. First, the supply of materials and labor to repair vessels is in an extreme deficit. This means we have seen labor rates increase by as much as 30 percent over the last two years and similar increases in materials. Secondly, as people were unable to travel, boats became a safe way to socially distance and still have fun. Therefore, the demand increased for vessels, and supply dropped causing a large spike to vessel pricing. There has never been a better time to re-evaluate the insured value of the vessel and ensure there are enough funds to place an insured back in a pre-loss position. A safe starting point for insured values is an increase of 30 percent.”
A thirty percent increase; coming from a claim’s examiner, you can take that to the bank. As Ian described, even just the overwhelming demand for “pandemic” friendly boats contributed to price increases before even factoring in the various shortages affecting the numbers. Prospective boat owners may have trouble finding a brand-new boat for the upcoming season and may turn their attention to the used boat market. Before wading into the used boat market, PMU has some specific advice for used boat shoppers:
When buying a used boat, spend the money on the marine survey. It’s a worthwhile investment that can save you money and reduce potential headaches in the long run. A marine survey will identify deficiencies that could be costly to repair, or even worse…could be dangerous. Surveyors know what to look for to ensure the vessel is seaworthy, and safe to operate in the open water. They will also be able to provide a current market value, based on the current vessel condition and market values of similar boats of that year and model. Bolster your boat-buying strategy with a marine survey.
While we are still mired in these unprecedented market conditions, boat owners, whether seasoned or new, are encouraged to add UPDATE BOAT VALUE to their pre-season boating checklist. Getting that value right, then adjusting the insurance policy as needed with their broker, will give boaters a little extra peace of mind while enjoying the waters this upcoming season.
Resources for boat values
Pacific Marine Underwriters
Business insider: Boat shortage, shipping delays, rising prices
Marlin Mag: Supply issues in the marine industry
Car and Driver: Seat foam shortage
Woodworking Network: Foam shortage explained
Safe Harbour Insurance: Find a surveyor
Safe Harbour Insurance: Tips for buying a boat