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.
Trash To Treasure?
For consumers, buying and repairing a boat with severe storm damage brings many challenges. Though CAT Team surveyors try to establish a rough repair estimate, it's not nearly as complete as if a boat were going through the normal repair process. Once the CTL threshold is reached, other damage might not even be assessed. One big challenge is simply transporting a damaged boat. An auction winner has a short time to remove the boat from the storage yard, and it has to be stored somewhere while the repairs take place. Add transportation and storage to the distressed price of the boat and it may not be such a good deal.
One of the most devastating events that can happen to any boat is sinking in saltwater. All too often engines are not flushed and pickled right away after a major storm because boatyards have to dig out for days before any work can be done. Engines, which can make up half of a small boat's value, can be permanently damaged by corrosion. Saltwater damages electrical devices and connections and can wick into wires, requiring a complete rewiring of the boat. Soft goods, such as cushions, bedding, and carpeting will have to be thrown away. Wooden bulkheads may be waterlogged and will begin to rot and need replacing. Steering systems and engine controls will likely be damaged as well. It's safer to assume the worst for a saltwater-submerged boat.
Still, some people are up for the challenge. Years ago, member Dave Netting bought a 35-foot O'Day sailboat that ended its previous life during a hurricane by crashing through breaking waves onto the rocky Maine coast. Netting knew the boat needed serious repairs and didn't even bother to have a marine surveyor inspect it. When it finally arrived, he described it as a seaweed-filled hole with a boat around it. The boat, while admittedly a mess, was certainly a bargain. Dave's experience with fiberglass and woodworking was limited and he expected the project to take about a year to complete. The boat, however, had other ideas, and the job, start to finish, took a little over two years, working every spare minute of every day. The cost, not including his own labor, was a little less than half of what a new boat would have cost.
Would Netting do it again? "Looking back on it, no," he says. "We did a lot of work and took some pretty big chances."
Paying someone else to repair a storm-damaged boat is rarely cost effective. Repair yards routinely charge $85 per hour and up, and the labor can run to hundreds of hours. It can cost thousands just to rewire a 35-foot boat. Even experienced repair yards that buy storm-damaged boats can get in over their heads and find costs getting out of hand. As one boatyard owner joked: "How do you make a million dollars repairing storm-damaged boats? Start with 2 million dollars."
Still, in the aftermath of a major storm, hope often emerges, and new dreams are born amidst the destruction. Auction sites have pages of mangled boats that can be had for a fraction of their pre-damage value, and some of the deals seem too good to pass up. But before you consider buying a CTL, ask yourself these questions:
- Is the boat still a bargain after transportation and storage costs are added to the purchase price?
- Do you have the skills, tools, time, and a storage facility?
- Are you undaunted by large projects?
- Would zoning or subdivision rules prevent you from parking a boat on your property?
- Will your neighbors be OK with seeing a wrecked boat in your backyard or driveway?
- Do they tolerate the sound of power tools late into the night?
- If you decide you have the skill, attention span, and money for such a project, be sure to hire an experienced marine surveyor to inspect the boat before you bid. The money you spend could save you thousands of dollars and many sleepless nights.
BoatUS Consumer Protection may be able to help you find a workable solution. If you need help, email us at consumerprotection@BoatUS.com or call (703) 461-2856.
To Home Page
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