Depreciation on boats

[charleville]

This is a question to see if anyone knows standard depreciation rates for boats trailers and motors, please.

It is time to renew my insurance on my Quintrex 4.75m runabout, 60 HP 4 Stroke Merc and trailer, all of which are now five years old.

My RACQ insurance on these is for the sum assured "or market value, whichever is lower."

Obviously, the market value on this rig is going to be much lower than the original purchase price which is what I have continued to pay the premiums for over the past five years. However, I might as well save a few bucks if I can by reinsuring for a lower "sum insured" which should reflect something closer to market value. (being careful, of course to not under-insure)

Any clues please on what would be the red book/blue book values, if there were such for boats; viz what sort of depreciation rates do boats suffer, please?

It is always interesting to me to note that when insuring home and contents, the insurance agencies nominally increase the value insured each year consistent with market growth but they don't do the reverse on depreciating goods like boats.

[Brumby]

Why don't you ask RACQ to tell you how they would calculate the value in the event of a claim? I'd be interested to hear what the answer is. You can't be the only one overpaying on premiums, I'd love to know what the total is every year.

[Sportfish_5]

Don't work it out - you'll just get depressed

[charleville]

Don't work it out - you'll just get depressed

Ah well. I am sure that it could not be any worse than for cars. Just out of curiousity, I just had a look at the Red Book at what a basic Falcon would depreciate by in one year. The result is very depressing for anyone who buys new cars regularly - see the clip below...

( I reckon that someone will ask where I got thiis so in anticipation, here is the URL http://www.redbookasiapacific.com/au/home.php )

[charleville]

[ Just out of curiousity, I just had a look at the Red Book at what a basic Falcon would depreciate by in one year.

Actually, I then went a step or two further and using the data from the red book I plotted a graph of age of vehicle versus its depreciation as a percentage of the original purchase price. I have used RRP as its original purpchase price and used the top private sale price as its current value. The resulting graph is shown below.

If I were to translate this logic to boats, at best a five year old boat would be worth about 30% of its purchase price. Not sure if the parallels apply but I am interested in any advice here from those "in the know."

[Chine]

Charlie,

Good question.....but very difficult to answer.

I have an an "Agreed Value" policy which is is claused dangerously with the following......"In the event of total loss we reserve the right to replace the boat at our option".......I must say that this worries me a little and may steer me back to a "Market Value" policy. I would support that policy with good up to date photos.

My only suggestion is to watch the second hand market and factor in an additional amount to prevent under-insurance.

Surely there is a member on these boards with an insurance background who can give you the right answer.

Chine

[Chimo]

Hi Charleville

Hot out there today?

A neighbour of mine bought a new 9m boat FRP and sold it 2 yrs later and got about $20k more for it. Logically this was due to the rise in the cost of resin and probably due to other factors that had caused the price of the boats to rise in the 2 yrs.

We are talking 180 to 200K boats here but if similar principles apply and the cost of the boat you bought has risen then the market value of our second hand boats also tend to either fall slower than car depreciation and even in some cases go up if you bought well to start with.

Seafarers such as Victorys and Vagabonds are another example, again in FRP, but their depreciation is rather flat cf to cars value decline. That "fact" is also very useful when justifying FRP purchases to the other .5

Maybe it could be worth checking the cost to purchase a similar boat to the one you are looking to reinsure on the seccond hand market to get a market based idea of actual market value / replacement value.

I know that doing the same with my boat it would seem it's worth more on the market than I paid for it and as a result I upped rather than reduced the insured value after discussion with my insurer.

It will be interesting to see where you end up with an Al boat if you pursue this.

Cheers

Chimo

[Brumby]

Chimo, are you talking about new boats? I'd agree that if you bought well on the 2nd hand market you could end up ahead with a decent brand, but for most of our boats the real cost is in the motor(s) and they surely don't appreciate!

[PADDLES]

hi charlie, had the same issue with racq. they didn't nominate a market value on the policy document (which they do on a vehicle policy) so i rang them to find out how they calculate it. they told me that in the event of a total loss they suss out the boat shops in your local area for what a similar boat costs to replace and then settle up with you on that value or on the original value you have nominated, whichever is lower.

ps. was chatting to a bloke who changes boats fairly regularly in the $120k to $200k range and he reckoned on average he was losing 25% in the first year for his boats ............. youch!

[Chimo]

Hi Brumby

Agree with you re the motors.

Paddles
So the research you do your self on replacement cost will provide you with a value to insure that is close to the same info the insurers use. Thats probably why its worth having a talk to them before renewing heh.

What breeds of boats are you talking about?

Chimo

[NAGG]

Even our beloved ATO depreciates cars at 22.5% pa . When it comes to the trade in (on a new vehicle) the trade ins > have pretty well mimicked the ATO figures > ...... Now that aside .... I bought a new Quinnie 5.35 CC (fully fitted out) $22K & sold it 9 years later for $12K From what I have seen + my own experience , boats hold their value significantly better than cars (after an initial drop) You can still see boats that were being sold SH 15 years ago for $5-7K going for $5K today (eg Nautiglass V150 with a 55 johnno) ...... GO FIGURE NAGG

[PinHead]

hi charlie, had the same issue with racq. they didn't nominate a market value on the policy document (which they do on a vehicle policy) so i rang them to find out how they calculate it. they told me that in the event of a total loss they suss out the boat shops in your local area for what a similar boat costs to replace and then settle up with you on that value or on the original value you have nominated, whichever is lower.

ps. was chatting to a bloke who changes boats fairly regularly in the $120k to $200k range and he reckoned on average he was losing 25% in the first year for his boats ............. youch!

you think he would give up if it is costing him that much.

[idiotfisher]

i know a few people that buy and sell bayliners in the 35 to 50 ft range and they reckon they lose appox 35 to 45 % of new purchase price after 3 to 5 yrs,but i would expect this to change dramatically over the next 5 to 8 yrs thereafter.

[PinHead]

i know a few people that buy and sell bayliners in the 35 to 50 ft range and they reckon they lose appox 35 to 45 % of new purchase price after 3 to 5 yrs,but i would expect this to change dramatically over the next 5 to 8 yrs thereafter.

Once again..if they were losing that much why would they continue doing it?
I would doubt they lose that much looking at 2nd hand prices compared to new price.

[Chimo]

I agree with the point that Pinhead has made; the loses are not necessarily that high; there my be situations where a big loss occurs but how well did the person buy in the first place ie price and type of boat?

Although it may not be the case every time in this day and age there are cases where the price goes up eg my mates $20K extra on $200K over two years.

A number of cumulative bad decisions can keep you short of $s or make you short of $s and the opposite is just as true which is what Pinhead is saying.

Chimo