Getting Real…with OnFireFamily

I’ve been mulling this post over in my head for a couple months now. In a previous post, I talked about how our buyer’s broker gave us some of the realities of the current boat buying market. I promised a separate post on that. Here it is.

A bonus with this post is a fun, useful, and on-point YouTube video by OnFireFamily a little further down the page.

There seem to be three industries that march hand-in-hand in the boat buying/selling world: boat insurance, boat financing and boat brokers. I think of them as a kind of triumvirate…or is it trinity?

Lake Superior on a boat shopping trip

When we first contacted buyers’ broker Michael Martin, with Curtis Stokes & Associates, almost the first words out of his mouth were about insurance. The insurance market has become very tight with insurers leaving the marine market. Apparently there have been so many claims that some insurers don’t want to be in that market anymore. This increase in claims could be due to hurricanes in the past couple of years or it could be increased claims because there are a lot of new boaters on the water during Covid. With fewer insurers, the underwriting has tightened up.

Insurance

Michael suggested that our first order of business would be to talk to an insurer about what type of boat we would be eligible for. We talked to Jon Horton of Jack Martin & Associates. Insurance brokers like Jon Horton shop a number of marine insurers to find you the best deal. He explained there are some insurance constraints depending on the size of the boat and the age of the boat.

Size. It turns they don’t want to insure you for anything bigger than the last boat you owned + 15 feet. In our case, our last boat was 31 feet. The insurers wouldn’t want us to get anything bigger than 31’ + 15’ = 46’. If we wanted to get a 50’ boat, for instance, we might not be able to get insurance on it. Fortunately, we want to stay in the 40’-43’ range, so this constraint shouldn’t be a problem.

Interestingly, the fact that we’ve chartered larger boats didn’t seem to matter. It was based on the size of boat you have owned. Probably that has to do with “what size of boat have you had to maintain?” rather than “what size of boat have you successfully driven?”

Age. Some insurers are not issuing new policies for boats over 30 years old. People who have an existing policy are being renewed even when their boat hits 30 years, but for new policies, the number of insurers writing policies for boats of that age decreases dramatically.

I have seen Facebook posts of people who bought vintage boats and are having trouble finding insurance. I always pipe in with “don’t forget to talk to the people who insure your home and auto”. Our local State Farm insurance agent says they insure boats up to a million dollars and they insure classic boats. They require a survey and have limitations on how far offshore you can go. There is a big difference in the types of coverage offered by marine insurers vs the State Farms of the world that might make bundled insurance less attractive. For instance, State Farm doesn’t have mechanical breakdown coverage. Bummer. But if that is the only insurance you can get wouldn’t it be better than having to sell the boat because you cannot insure it?

Financing

The second potential “gotcha” in the triumvirate is financing. We talked to Cindy Lewis of Sterling and Associates who specializes in lending for boats. Her main message was “get your financing while you are still working!” She says it breaks her heart when she gets a phone call from someone who says, “I retired last week and now it is time for us to get a boat”. The lenders want to see income rather than just assets. It is much easier to get financing when you still have a job.

It seems there may be some age-of-boat constraints, too. I can’t remember at what age a boat becomes iffy from a lending perspective, but when a boat gets to a certain age it is not attractive collateral for lenders.

We have been saving our shekels so we wouldn’t have to finance…but then we learned of another aspect we need to consider.

Selling the boat

The third consideration is “who is going to buy my boat when I’m done?” If the next buyer has to worry about age of the boat, do I need to make sure to buy a newish boat so it is still newish when I want to sell it? But buying a newer boat might cost more money, meaning we might need to finance…and so that means it needs to be new enough for the next people to finance…and…and….

It is a bit frustrating to have to think about the next buyer when you are looking for a boat. OnFireFamily captures the complexities in this YouTube episode. Most Friday evenings they have a happy hour where they review a yachtworld ad looking for their loop boat. They love vintage boats, but are thinking about buying something entirely different than what they love just because of these considerations.

Like us, OnFireFamily plans to pay cash for a boat. We have similar backgrounds of Dave Ramsey budgeting, paying off the house, and saving up for a boat. They are a few years ahead of us on the timeline of being completely debt free as they paid off their mortgage about 5 years before we did.

For Lance and I, it remains to be seen whether we can stick to our original plan of paying cash. We go back and forth between “stay within budget” and “get a newer (more expensive) boat so you won’t have the aggrevation of endless repairs”. Like I said, it remains to be seen.

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