Finance & insurance

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Financing the Dream

For most of us, buying a boat is going to require bank support. In that case, the first step before you begin shopping should be a credit check.

These days, lenders are looking for customers with credit scores in the good 700–750 range. If yours comes in the excellent 750-plus category, the banks will be especially keen to have you in their portfolio, and their terms may reflect that.

Unlike real estate purchases in normal economic times, boats generally do not gain value over time. Quite the opposite. Therefore, banks prefer loans on new boats, and it is reflected in the rates and term of the loan. There’s significant shared value to the bank and the buyer in new boats. New boats come with warranties. If the buyer has a change of heart down stream with a new boat, even if it’s only to buy something different, he will have a better chance of selling a newer boat under warranty and thereby pay off the loan. It’s a better risk for the bank.

If you are leaning toward a nice used boat and you have substantial equity in your home, a home equity line of credit could be a path to the cash and terms you need to get the boat. In that case, the loan is secured by your home, a much better risk consideration for the bank. This works for new boats as well, of course.

Most small boat dealers offer dealer-financing, which is a loan brokerage arrangement with various lenders that simplifies and assists buyers on-the-spot. The dealer may have access to lenders offering better terms than the brick-and-mortar banks since they have developed relationships with specialized lenders who better understand the boat-loan business. Your local bank may not have a boat loan specialist to focus on the marine market. It’s worth getting a proposal to compare with your bank.

Borrowing money is a bit daunting, even for the most experienced boat buyers, but rest assured. Boat owners are often considered solid, low-risk customers. We come from a demographic that celebrates success and honors commitments. It’s kind of what boat ownership is about. The banks like that.

Thanks to Dana Scott, V.P. & S.E. Manager Intercoastal Financial Group, LLC for fact-checking this article.

 

Insuring Her

There are two types of boat insurance—agreed value and actual cash value. Agreed value is based on the boat’s value on the day that the policy is written. This means that depreciation in not factored in when determining if a boat is a total loss. However, a partial loss may be depreciated in adjusting for repair. Actual cash value policies factor in depreciation and normally cost less.

Another key term to understand is “all-risk.” This is the normal type of policy, but it doesn’t mean what it might appear. It means that the policy covers any damage not specifically omitted in the policy. So, be sure to read and assess the exclusions, which will normally include such conditions as wear and tear, manufacturing defects, design defects, freezing damage and so on.

Never fear, your insurance company will be happy to add extra coverage to include personal effects, liability, towing costs, salvage costs, specialized gear coverage (navigation equipment, propeller…), consequential damage such as mold, corrosion, rot and other elements to make you rest easy. Many policies cover attached equipment such as anchors, auxiliary engines (outboard “kickers”), tools, installed cushions and some essential gear. You may also need temporary cruising extension coverage if you’re planning to take off to another jurisdiction like Cuba, the Caribbean, Canada and beyond. But you need to confirm it, see it in writing and, of course, pay for it.

Most good yacht policies cover towing, salvage, liability, and all equipment “pertinent to the operation of the vessel,” but you may want to be sure on high valued tenders and such.

Owners of small boats, normally under 26 feet long, can usually add the boat to their homeowner’s insurance policies, but there are usually limits on where and how the boat can be used. Most homeowner’s policies restrict the coverage to use in inland waters, lakes and rivers. The policy may also restrict the amount of horsepower.  But it’s worth considering as the cost and convenience can make this option attractive. For coverage of a particularly high-value boat of this size, it’s smart to consider a good agreed value policy from a specialist.

Besides the boat value and your intended use of the boat, the cost of insurance will take into account your boating safety education, your boating and driving records, liability limits, credit score and the deductible.

If you live or travel through the hurricane zone, your insurer will want you to provide your hurricane plan. Do you have a safe place for the boat during a storm? Can you store her inside a stormproof facility? The answers will affect the price or even whether you can get coverage at all.

Discounts may be available for limited use. If you store your boat out of the water in the winter, you may qualify for a break in price. Freshwater use is less expensive than saltwater.

Marine insurance is largely unregulated and no two policies are alike. It pays to shop around.

Finally, insurance is about adding to the comfort of boat ownership. The purpose of having a boat is to enjoy it safely and know that you are covered in the event of the unexpected.

Thanks to Totch Hartge of the Gowrie Group for fact checking this article.

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Boat U.S.
Marine Insurance Program

Phone: 1-800-283-2883

Website: www.BoatUS.com/insurance 

BoatU.S. has been insuring boats and only boats for over 50 years. Our policies feature broad coverage, unlimited water towing from TowBoatU.S. and much more. Whether you own a runabout, cruiser, sail boat, fishing boat or PWC, our insurance specialists work with you to find the right coverage at the right price. Apply online at BoatUS.com/insurance for a fast free quote, or call toll-free at 1-800-283-2883 for personal service. BoatU.S. – the Best Crew for Protecting You!


Boat U.S.
Boat Finance & Documentation

Phone:1-800-365-5636

Website: www.BoatUS.com/boatloans

Let our team of experts help you finance your next boat. Working with leading marine lenders, BoatU.S. is able to offer competitive rates and terms to help you purchase a new boat or refinance your existing boat loan.  Need help documenting your boat with U.S. Coast Guard?  We can help with that too! Learn more at BoatUS.com/BoatLoans


IMIS & Gowrie Group

Contact Names: Al Golden &
Totch Hartge

Phone: 800-541-4647
410-827-3757

Email al.imis@gowrie.com totchh@gowrie.com

Website: www.gowrie.com/imis

International Marine Insurance Services is now a part of Gowrie Group. Together, as the largest independent marine insurance agency in the nation, Gowrie and IMIS offer a broad range of risk management, safety services, and insurance solutions for boats, yachts, worldwide cruisers (Jackline Program), raceboats, yacht clubs (Burgee Program), and marine businesses. 


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Jack Martin & Associates

Contact Names: Jon Horton &
Morgan Wells

Phone: 800–497–5804
410-626-1000

Email: jon.horton@jackmartin.com
morgan.wells@jackmartin.com

Website: www.JackMartin.com

Since 1929, Jack Martin & Associates, located in Annapolis, Maryland, has provided boat, yacht, and marine insurance throughout the U.S. and worldwide to offer customers comprehensive coverage options. Jack Martin & Associates’ independent agents have decades of marine related experience, specializing in boat, yacht, and commercial marine insurance. You benefit directly from our relationships with multiple insurance companies worldwide and our reputation for tailoring an insurance policy to fit your cruising needs. Give us a call today!


Suntrust Marine Lending

Contact Name: Don Parkhurst
Senior Vice President

Phone: 800-797-BOAT (2628)

Website: suntrust.com/marine

SunTrust marine lending experts have the experience that few other banks have. In addition to providing you with your boat loan, we can help you value your boat, find a surveyor and we can even document your boat with the U.S. Coast Guard.  


Trident Funding CORP.

Contact Names: Jane M. Tayman
& Kelly M. Ruggieri

Phone: 888-386-3121

Website: www.tridentfunding.com

Trident Funding has assembled the very best team to cover the entire Mid-Atlantic area!  – Your experts on the Chesapeake Bay.  When looking to finance the boat or yacht of your dreams, let their combined decades of expertise, experience and knowledge provide you with the best service from start to finish.  Trident Funding has been in operation for 20 years and is the largest privately owned marine finance company in the United States. Work with the team you can trust!