Are Storm-Damaged BoatsBy Charles Fort
Trash Or Treasure?
Published: April/May 2013
Hoping for a great deal out of Hurricane Sandy? You may get lucky, but here's what you're getting into.
Have you ever dreamed of buying a bargain-priced banged-up boat, and wondered if you should? It's a fact of life that every so often a major storm comes ashore and wreaks havoc on thousands of boats. Case in point: Hurricane Sandy that pummeled the East Coast last fall and destroyed an estimated 65,000 recreational boats. Many were so badly damaged, they were written off by insurance companies, including BoatUS. Looking behind the scenes to see how some of those boats make it back on the water can help you decide if a bargain boat is right for you.
Treasure To Trash
The BoatUS Catastrophe Team (CAT Team), a group of experienced surveyors and claims adjusters, spent months finding, salvaging, and cataloging thousands of boats that were damaged by Hurricane Sandy last year. Many were destroyed beyond fixing, some sank, and many more had significant enough damage that they were declared a Constructive Total Loss (CTL). After a disaster, CTL designations are usually given to boats after the CAT Team provides an estimate in the field for repairs that exceed the boat's value. A boat may be declared a CTL because the damage is great, or because the owner didn't insure it for much, in which case it may be well worth repairing. But it's not easy to tell one from the other. A boat that appears relatively undamaged may, in fact, have been sitting underwater for days.
Once a boat is dubbed a CTL, the insurance company sends a check to the owner, along with settlement documents, and in return receives the boat's ownership papers. Most people view a CTL designation as the kiss of death. Though owners usually have the option to buy back their boat at its salvage value, most choose not to do so. Even if they don't, the boat may still have a bright future. Mike Costa is a broker for Certified Sales, a company that finds new homes for boats that the insurance company has deemed not cost effective to repair. "Once the insurance company has declared a boat a CTL, we're given an assignment to the boat, which gives us the authority to pick it up, move it, and store it," he says. "For Hurricane Sandy, we rented space in both New Jersey and New York, where we stored several hundred boats while we worked to find people to buy them."
Once the boats are safely stored ashore, the company takes pictures of them and writes a brief condition report. Then, they post the information to one of several websites and put them up for auction. Boats are sold "as is, where is." Bidders are required to register and provide a small deposit. At the end of the auction process — typically four to eight weeks — the winner is notified. Once the winning amount is paid, the ownership papers are transferred and the boat starts its new life. Surprisingly, the vast majority of CTL boats eventually get sold; Costa says only one or two percent of them are not. For those boats, he says, there's usually little left of them and they eventually get disposed of properly.
The auction winner titles and registers the boat, but the next step is the most daunting: repairing it to make it seaworthy again. Some boats have gaping holes in the hull or deck, some were submerged, and some were pounded relentlessly for hours, with resulting serious structural damage, corroded engines and wiring, and shredded gelcoat and paint. Boat lovers often get squeamish when they see that much damage, but most can be successfully repaired with enough time and money.
Carroll Robertson, vice president of BoatUS Marine Insurance Claims, says some CTL boats go to boatyards that repair them during the slow season to keep their employees busy. Some companies buy several, load a container, and ship them overseas where labor is cheap. Others are sold to starry-eyed buyers looking for a bargain, who often have more time than money to invest.
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Your marine surveyor is the person with expertise whom you hire to protect your best interests and check everything to make sure a boat is sound.
Hiring a professional surveyor before you buy could be the most important decision you'll make.
Learning to recognize the signs will help you protect yourself from boat buying and selling scams.
Avoiding That Sinking Feeling
When an insurance company declares a boat a Constructive Total Loss (CTL), it means the boat was heavily damaged; whomever buys it from the insurance company knows up front what they're getting into. Some storm-damaged boats will be properly repaired as good as new, but many more will be patched up just enough to sell, leaving the new owner with what could end up being an unusable boat. Hire a marine surveyor to inspect any used boat you're considering buying. Here are tips to help you spot a boat that might have been badly damaged in a storm.
Trace the history: When a car is totaled, the title is "branded" as salvaged or rebuilt, and buyers know up front that there was major damage at some point in the car's history. But only a few states brand salvaged boats, and some states don't even require titles for boats. Anyone wishing to obscure a boat's history need only cross state lines to avoid detection, which can be a tip-off. Look also for recent gaps in the boat's ownership, which may mean that it was at an auction or in a repair yard for a long time.
Look for recent hull repairs: Especially on older boats, matching gel-coat is very difficult. Mismatched colors around a repaired area are often a dead giveaway, and may signal nothing more than filler under the gel-coat, rather than a proper fiberglass repair.
Look for new repairs or sealant at the hull-to-deck joint: Boats that bang against a dock during a storm often suffer damage there.
Evidence of sinking: Check for consistent corrosion on interior hardware, such as rust on all hinges and drawer pulls. You might be able to spot an interior waterline inside a locker or an area hidden behind an interior structure.
Corrosion in the electrical system: Corrosion on electrical items, such as lamps, connectors, and behind breaker panels, might mean the boat sank recently. Does the boat have all brand new electronics? Why?
Look for evidence of major interior repairs: Fresh paint or gelcoat work on the inside of the hull and the engine room is usually obvious. All new cushions and curtains can be a tip-off too.
Ask the seller: In some states, a seller isn't required to disclose if a boat was badly damaged unless you ask. If the seller hems and haws, keep looking.
Where To Find Damaged Boats
Visit our directory to find a qualified marine surveyor to inspect any boat you you're considering buying: www.boatus.com/boatinsurance/survey.asp