The Boat-Buyer's Toolbox

When it's time to buy a boat, you'll need all the tools available to score a great deal.

By Charles Fort

Wonder just how popular boating is? In the United States, one in three American adults participates in boating every year. That translates to a lot of boats, and a lot of people buying boats. In fact, 1.5 million of us buy a new or used boat every year. Whether you're a first-timer or an old salt, there are things you can do to ensure that your next purchase goes off without a hitch.

BoatU.S. Consumer Protection has been helping people navigate the sometimes choppy waters of boat buying for more than 40 years and can guide you through finding a boat, warranties, service contracts, inspections, financing, insurance, and the necessary paperwork to make it all legal. If you're in the market for a new boat (and who isn't?), here's what you need to know.

Shopping For A Boat

Once you've decided on how much you can spend, you get to dive into the fun part, actually searching for your dreamboat. New-boat buyers will want to find a dealer for the brand they're shopping for in their area. Ask around and do some research to find a quality dealer.

New boats come with manufacturer warranties that vary widely in their coverage, so compare them before you buy. Look for multiyear warranties for hull and engines. Find out whether the warranties transfer to subsequent owners, which can add substantial resale value. One advantage of buying from dealers is that they can also take trade-ins, but keep in mind that as with cars, you won't get top dollar because dealers have to make a profit on reselling your boat. Selling it yourself will usually bring in more money.

Used-boat buyers have a couple of choices. Larger boats are often sold by boat brokers, who operate like real-estate agents. Buyers can hire a broker to help them find a boat, and the commission is usually split with the seller's broker, so there's no cost to the buyer.

Smaller boats can be found online at such sites as eBay and craigslist, but remember that these offerings carry the risk of fraud. There are many unscrupulous "sellers" who'd like to separate you from your money. Be wary of sellers who insist on using a specific online escrow service – it may not be legit. Ask to see ownership documents to verify that the seller really owns the boat.

If the boat isn't local, hire a marine surveyor in the area, or have someone you trust verify that there really is a boat and that the seller has the title and registration. Go tohttps://www.boatus.com/expert-advice/expert-advice-archive/2016/january/new-boat-selling-scamsto learn more about potential scams.

Marine Surveys

Too many complaints to Consumer Protection start with "The seller said everything worked fine, but when I launched the boat, I found all kinds of problems!" Unless you're looking at a simple, inexpensive boat, hire your own expert to inspect it.

A condition-and-valuation survey is a snapshot of the condition and value of a boat; think of it as an independent document that speaks for the boat. Marine surveyors will check the condition of AC and DC electrical systems, plumbing and through-hull fittings, deck hardware, propane and fuel systems, steering and controls, and safety equipment. A proper marine survey will be an in-depth written report that evaluates the boat according to U.S. Coast Guard regulationsand to American Boat & Yacht Council and National Fire Protection Association standards.

A knowledgeable surveyor will also know if a specific make has a history of major problems. A survey is a useful tool for buyers to negotiate a price based on what repairs or upgrades the boat needs. Surveys are sometimes required for insurance and financing, but most buyers should get one even if it's not required – it can easily pay for itself by uncovering potentially expensive repairs, and it gives you a firm value from which to negotiate. Surveys cost from $15 to $20 per foot.

Sales Contracts

Once you've determined that the boat you want is sound, the next step is to complete a sales contract, then pay for the boat. Dealerships and brokers should have their own contracts, but make sure you go over them well. Consumer Protection has had complaints about dealer contracts that had missing or incomplete information, leading to disputes after the sale.

If you'rebuying from a private party,go toboatus.com and search consumer affairsto download a sample sales agreementor bill of sale. Fill it out completely, and don't forget to list the boat's Hull Identification Number (HIN) and all engine serial numbers. If there's a trailer involved, don't forget to list its serial number. Make sure the terms of the sale are spelled out. Is the sale contingent upon a satisfactory survey and/or sea trial? How will your deposit be returned if the sale falls through? Is there a trade-in?

For new boats, request a firm delivery date and a list of all warranties. All contracts should have a statement that the boat is free of all liens and encumbrances. If you're financing your boat, be prepared to provide personal financial statements and tax returns; boats are considered luxury items, so the process is more akin to buying a house than a car.Visit Consumer Affairs Resources at https://www.boatus.com/expert-advice/news-and-issues/consumer-affairs for sample purchase agreement and Boat Buyers Guide.

Insurance

Only a few states require insurance, but that doesn't mean you don't need it. Even if your bank or marina doesn't require your boat to be insured, having it could save you problems if you're involved in an accident, especially if there are injuries.Usually, homeowner policies won't cover boats larger thanabout16 feet and 25 hp, and they rarely have the necessary provisions to cover losses that mayoccur with a boat, such as fuel-spill liability or wreck removal.

The more your boat is worth, the more important insurance becomes to protect yourself from financial loss. Notall policies are created equal; look closely at the policy provisions outlined in the sidebarwhen you'redeciding which policy to buy.

Post-Sale Details

Now that you've had the boat inspected, paid the seller, and are holding the keys, the boat isn't really yours until the seller signs over title. (But not all states require titles.) Look over the paperwork carefully and make sure the HIN on the boat matches the title. Most states require trailers to be registered as well, so make sure you have those documents, too. In most states, boats with motors will have to be registered. Larger boats may need to be documented.

About The Writer

Charles Fort is a former associate editor at BoatU.S. Magazine and former manager of the consumer affairs department.

Facts About Extended-Service Contracts

• Service contracts aren't legal warranties with the weight of federal laws behind them; they're really insurance policies.

• Some service contracts don't cover consequential damage. If your water pumps fails and ruins your engine, they may only pay for the water pump.

• You may still have out-of-pocket expenses. Many service contracts have deductibles and won't pay, for instance, to have the engine removed or the boat hauled for repairs.

• Dealers make money on service contracts, but their pricescan be negotiated.

• You'll need preauthorization before having repairs made, though manufacturer-based contracts perform more like a warranty when it comes to service.

• Most service contracts are transferable. This is a great selling point when it comes time to sell your boat.

• Most service contracts aren't backed up by manufacturers. Those that are usually have better coverage. While these may cost more, they typically offer superior service because the manufacturer's reputation is on the line.

Making Sure Your Insurance Delivers

• Consequential Damage: Many policies don't cover the catastrophic damage that happens to a boat due to an excluded cause, such as corrosion, gradual deterioration, or wear and tear. Choose a policy thatwould cover, say, a boat sinkingcaused by a corroded underwater fitting that failed.

• Salvage: Some policies may deduct the salvage costs from the amount that's available to fix or replace your boat or may pay only a percentage of its value toward the salvage expenses. They may also leave the task of arranging the salvage work up to you. The most generous policies pay for salvage separately from the damage repairs up to the insured value, and the insurance company will make all of the necessary arrangements with the salvage company.

• Wreck Removal: Hurricanes, other wind and weather events, fire, explosions, and sinking can destroy your boat beyond repair, leaving behind only a wreck. Some insurance companies will pay only a percentage over your boat's insured value and leave you to clean up the mess. If the worst happens, you'll be better off with a policy that pays up to the liability limits (usually $100,000 or more) for wreck removal.

• Fuel-Spill Liability: Some policies pay the cost of cleaning up a fuel spill only if it occurs due to a "covered loss," while others will pay only up to the liability limits on the policy. The most generous policies cover fuel-spill liability separately and provide coverage up to $854,000, the maximum amount for which you can be held liable under federal law.

• Liability: Injury settlements tend to be very expensive, so you may want to consider increasing your limits. If your boat isn't worth that much, you can skip the hull coverage and buy a liability-only policy, often at a surprisingly good rate. Make sure liability-only policies include coverage for salvage, wreck removal, and fuel-spill liability.

• Umbrella: If you have an umbrella policy, make sure your boat is listed.

Online Extra

Go to BoatUS.com/loans to find more information on boat loans.

This article was reprinted with permission from BoatU.S. Magazine, flagship publication of the membership organization Boat Owners Association of The United States (BoatU.S.). For more expert articles and videos to make your boating, sailing, or fishing better, visit BoatUS.com.