Questions buyers ask.
Insurance, lending and surveys — the questions we hear most when brokering the purchase and sale of yachts.
Yacht insurance.
We are not insurance specialists, but we deal with yacht insurance and insurance brokers enough to offer these answers. For the detail of a policy, talk to a yacht insurance broker — and ask us anything, any time.
We know of no law that says you must insure your yacht — but if you have a loan on her, your lender will require it, and most marinas and shipyards will want a copy of your insurance binder. There are so many problems outside your control that we would always recommend proper yacht insurance.
No. Price matters, but the details of your coverage matter more. We have read a number of yacht policies and they are not always standard forms — yacht insurance is different from car or home insurance. Know the details, including the legal jurisdiction of your policy.
Several. Be realistic about what you need: your navigational territory — when and where you use the yacht — is a good place to start. You will pay more to keep her in Florida in hurricane season, so consider cruising north for the summer; if you only cruise the Chesapeake, don't insure for the whole East Coast and the Bahamas. Take a boating safety course, such as the US Power Squadrons'. We are told a clean driving record helps. A higher deductible lowers the premium if you can carry more risk. And review your liability limits — you may be over- or under-insured.
Yes: Agreed Value and Actual Cash Value. With Agreed Value, the insurer pays an agreed value in a total loss, and repairs are covered “new for old”. With Actual Cash Value, depreciation is taken into account. Agreed Value costs more.
You probably mean All Risks and Named Perils. All Risks policies are the most common, especially in the US, and cover everything not excluded in writing. Named Perils, more common in Europe, covers only the items listed. Stick with All Risks.
Yes. Most yacht insurers also offer personal property, towing, medical, environmental and uninsured-boater coverage.
For insurance, absolutely. The insurer will want the primary safety defects on the survey's deficiency list repaired or resolved, usually within a short time, and will use the surveyor's valuation for the amount of coverage — though never more than the purchase price, even if the survey values the yacht higher.
Tell your insurance broker you intend to charter. It means a different policy, and an additional premium.
Communicate with your insurer, and never give them a reason to avoid a claim. If you are thinking of laying the yacht up without crew at a yard or a cheaper dock, check your policy's minimum crew requirements first. And always send your insurer a copy of any shipyard repair or refit contract, and get their written approval before you sign it and arrive at the yard — their reaction to most yard contracts may surprise you.
Yacht lending.
We are not finance specialists, but we work with many marine lenders, and offer these answers as a general guide to getting started.
Rates and terms are much like those for real estate or any other financed asset, and almost every marine lender offers simple-interest loans, so you only pay interest on the principal owed. Fixed-rate loans keep your payment the same for the life of the loan — typically 20 years, though we see 10 to 30. Adjustable-rate loans fix the rate for a few years, then let it move within a set range. Some lenders also offer interest-only, deferred-payment, annual-payment and seasonal-payment loans.
In our experience most marine lenders issue an approval within about 24 to 48 hours of receiving your completed application and paperwork. Some approve smaller loans online. The larger or more complicated the loan, the longer it takes.
Yes, and we recommend it. Sellers very rarely accept an offer contingent on financing, at least on the East Coast, and a pre-approval keeps your search within your budget and the whole purchase moving.
Typically 20%. Some lenders offer 10% or even zero down, and a few ask for more than 20%, depending on your qualifications.
We see marine loans from $15,000 to tens of millions. Some lenders cap the amount they will finance, but there are plenty of others for larger loans. Smaller loans usually carry higher rates.
Some do and some don't. Marine lending is competitive, so shop around and you should find one that doesn't.
Some lenders finance only fiberglass yachts, and most only yachts 20 years old or newer — but we work with lenders who finance older yachts, megayachts, high-performance boats, multihulls and wooden yachts. We have even seen boathouses, moorings and dockage financed.
Some lenders finance private-use yachts only, some allow limited chartering, and some will finance charter yachts. Shop around, and be honest and detailed with your lender about how you will use the yacht — including whether you will live aboard — so you end up with the right loan.
No. Many lenders finance LLCs, S-corporations and trusts, and many finance foreign-registered yachts — usually with your personal guarantee.
US marine lenders usually won't lend to non-US borrowers unless they own property in the US, have a Social Security number, or live and work here. We also work with European lenders, and have sources for leasing.
Most prefer the yacht documented with the US Coast Guard, which lets the lender file a First Preferred Ship's Mortgage — recording its lien with the federal government. Documentation also makes clearing in and out of the Bahamas easier, and is usually needed to cruise to other countries. Most lenders will also accept a foreign registration, such as the Cayman Islands, the Marshall Islands or the British Virgin Islands.
We usually see approvals good for 30 days, and several lenders extend them when needed.
Plan on it. The old “no-doc” and “stated income” loans have, we are told, all but disappeared — expect to supply plenty of documentation.
Yes — we won't help you accept a yacht without a survey and sea trial completed first. You will need a survey for insurance, no lender will lend on an uninsured yacht, and they will want her kept insured for the life of the loan. We want your survey and sea trial completely satisfactory to you, so there are no surprises once she is yours.
The second-home interest deduction can still apply in some cases. Ask your own tax advisor.
Surveys.
We are not surveyors, but we attend a good many surveys and have worked with many surveyors over the years.
You do if you are financing the purchase, and your insurer will want one anyway. Never accept a survey done for someone else — least of all the seller's. Hire your own surveyor, who is engaged by you and reports to you.
As you would any professional whose advice a big decision rests on: get recommendations, check credentials and references. Anyone can call themselves a marine surveyor, so an advertisement is not a qualification. Professional societies such as SAMS and NAMS are good sources. Read the surveyor's website and any articles they have written, interview several — by phone at least — and ask for a sample report. Your lender or insurance broker can recommend surveyors, and tell you any they don't accept.
Yes. For a purchase you need a Pre-Purchase (Condition and Value) Survey, the most comprehensive: structure, safety, electrical, propulsion and fuel systems, other mechanical systems, electronics and navigation equipment, maintenance and cosmetic condition. It should include a haul-out to inspect the bottom and running gear. You can, and should, also hire an engine surveyor for the main engines, generators and gearboxes. Insurance, appraisal and damage surveys exist too — the last, we hope, you will never need.
For most yachts short of a superyacht, we find the hull survey runs around $18–20 a foot, and the engine survey about the same. Survey and sea trial usually take a full day; a superyacht survey can take a week and cost much more. The buyer usually pays for the survey and the haul-out, the seller for the sea trial's captain and fuel. Haul-out costs vary by area, so compare yards.
You or your broker arrange the time and place of the survey, haul-out and sea trial with the seller, or the seller's captain or broker. Surveyors like to start with a cool engine room, so the engines and generators shouldn't be run beforehand if possible. They will spend several hours aboard before the haul-out, and the sea trial usually follows the launch. The seller should have the yacht open, clean and uncluttered.
Surveyors usually won't remove screwed or nailed panels, liners or carpets, pressure-test tanks, or do destructive testing such as drilling or removing paint or gelcoat. If any of that is needed, it has to be negotiated with the seller.
Surveyors don't pass or fail a yacht. They report what they find, make recommendations and give their opinion of fair market value — and you decide whether to accept the yacht, reject it or renegotiate. The findings will also shape whether she can be insured or financed.
You hired the surveyor, so only you get the report unless you authorize its release. Your insurer and lender will need a copy, and we recommend your broker has one to help you review it. When we negotiate with a seller over survey findings, we often encourage the buyer to share the surveyor's recommendations to support the changes we ask for.
Yes, if you can — but don't shadow the surveyors all day. Give them room to work and check in with them now and then; most will find you to show you anything that concerns them.
Some will and some won't, depending on their insurance, and they usually charge extra to go aloft. The sails are usually inspected during the sea trial, or unfurled at the dock, weather permitting.
Most blisters are not fatal. They are common, expensive to repair, and most fiberglass yachts get them eventually — we know of no reliable way to predict when, and we have seen a hull clean one year and blistered the next. Small ones are usually paint or gelcoat blisters; larger ones can be more serious. Most surveyors no longer recommend fixing small blisters straight away, but before a sale or at the next haul-out. The price should reflect them and the cost of repair, so don't reject a yacht for blisters alone — talk it through with your surveyor.
Ask us anything.
Personal and professional service is what sets us apart — as our many repeat and referral clients show.