Taking the hurt out of borrowing for a boat

October 3, 2018

WHILE it is common for car insurance companies to charge different insurance premiums depending on whether or not the vehicle is being financed, Nautilus Marine does not differentiate on financing when it comes to boats.

So if you are borrowing money to buy a boat, your insurance premium will be exactly the same for that boat as if you had paid cash for it. And that’s irrespective of whether you financed it under a lease, hire-purchase, chattel mortgage, home loan redraw, personal unsecured loan or any other financing format. The good news is irrespective of financing arrangements and irrespective of whether a trade-in was or was not part of the deal, the insurance premium will be the same from Nautilus Marine. However, should you decide to finance the boat from an external source, you will need to advise Nautilus Marine that the lender – be it a bank, credit union, private finance company or whomever – has a material interest in the boat.

That way, if things ever go pear-shaped or the boat is stolen, the right parties will be advised of the insurance payout so they can recover what is due to them. Be sure to look for the declaration of a material interest on your insurance proposal form. If you don’t see it, ask about it.

Most new runabouts bought – and in insurance speak that collectively covers all deck layouts including half cabins, cuddy cabins, bow riders, tiller-steer dinghies, centre and side console rigs – have some level of financing involved. Likewise, if you decide to repower your boat and borrow the money for that new, more powerful four-stroke outboard, you will not be penalised by Nautilus Marine for you having sourced the money from elsewhere.

But what will affect your insurance premium will be the new, presumably higher value of your boat with the new engine. And that’s exactly what you want – a higher level of coverage for a higher value of asset. If you do repower your boat, it is important to advise your insurer so the new value can be assessed, agreed and reflected in your insurance policy.

Likewise with electronics. You can still buy a sounder for a couple of hundred dollars, but now there has been a massive up-scale shift in the complexity, level of integration and value of marine electronics. Electronics now might contribute tens of thousands of dollars to the value of your boat – in fact a couple of years ago a leading manufacturer released an ultra-clever mapping function on a recreational sounder module that tipped the price scales to around $25,000. Since then, display screens have continued to get larger, transducers look in several directions, frequencies change according to the operator’s wishes… the list of technological advancements and the commensurate increase in total price get higher and higher. And that’s before we consider a new sound system.

Financing them? Not a problem. Just ensure you advise Nautilus of what electronics are now on the boat, the value for which they need to be insured, and your premium will be adjusted to the agreed price. But also be aware that just because you added $6000 of electronics to your boat, that does not mean your boat automatically and immediately is worth $6000 more. Once you take electronics out of the box, or once the new, greater version of the device comes onto the market with more grunt and features, your $6000 has just taken a hit in value.

That’s the great thing about dealing with a marine insurance expert like Nautilus – you’re dealing with people who understand boats and boating equipment, which means you have the opportunity to discuss these scenarios before you buy the equipment. Maybe not always with the first person who answers the phone, but the right person, with the right knowledge, is available to help you. Check you’re comfortable with the likely ramifications and if it all stacks up to your liking and your capacity to purchase and repay and meet your other commitments, borrow away.

Nautilus won’t be hitting you with a penalty just because it wasn’t your money that financed the upgrade. Special conditions and excesses should always be explained clearly in your insurance policy’s product disclosure document. Always check your product disclosure document and if you have a query, ask for clarification.

If you need further information, you can contact Nautilus Marine Insurance on 1300 780 533 for any boat insurance requirements.