Marine Survey Requirements for Boat & Yacht Loans

When purchasing a used vessel a marine surveyor can be your best friend. By definition, a marine survey is the boat lending equivalent of a home inspection and appraisal. Most simply stated, it is a critical inspection of a boat or yacht in order to obtain detailed information for a specific purpose, be that for purchase, insurance or repair. The survey can be performed both in and out of the water. No matter how a survey is defined however, it is an integral part of underwriting marine risk.

There are a few disciplines of surveyors; the yacht, small craft and the hull and machinery surveyors. Each discipline conducts collateral-specific surveys as well as loss investigations.

Yacht and small craft surveyors cover pleasure and commercial vessels less than 300 feet in length. These surveyors fall more in line with the home inspectors and appraisers. One of the surveys they provide is a Condition and Valuation Survey. This is a report on the current condition and value of the vessel in question whether good or bad. It provides a static picture of the vessel to the buyer, lender and insurance company. It is a detailed and accurate description of that vessel at that moment in time and is not used as a recommendation or a veto to purchase. It is not meant to obtain insurance, it assures all parties that the vessel meets the United States Coast Guard (USCG), National Fire Protection Association NFPA and American Boat and Yacht Council (ABY) safety standards and it also helps to determine the amount of insurance the buyer will need to adequately insure the boat. There are additional tests that can be done to the vessel that will increase the survey time and cost, but will provide you with more detailed information about specific aspects of the ship in question. From simple engine compression checks to a spectrometric oil analysis for instance. The age of the boat, the value of the boat, the requirements of your insurance company all play a part in determining frequency of this survey. Unlike a home inspection, a marine survey is recommended to be done every three years. In this regard, it is more like your own physical exam.

The second discipline, Hull and Machinery Surveyors, oversees the equipment and machinery on working marine vessel, such as, tugboats, barges, ship engines and whatever equipment they might have on board to facilitate the work they do that are not necessarily marine related - a crane that is used in the water, perhaps. They too may do similar work at the yacht and small craft surveyors, but can also represent different parties in the construction or repair of these ships.

The final discipline, Cargo Surveyors, is concerned with the cargo and what holds it. If for instance a ship of produce comes in and the produce has spoiled, the cargo surveyor will determine both the value of the cargo and why it was damaged. Further they then can act as an agent representing one of the party’s interests.

For the same reasons behind acquiring a marine survey - safety, protection, and knowledge - it is just as important to feel comfortable with your surveyor. This is not a field overseen by the U.S. Coast Guard or any authority for that matter. You must choose your surveyor wisely. If your survey is being requested for the purchase of a vessel and you are financing your purchase, the lender most likely will want a surveyor who is a member of the Society of Accredited Marine Surveyors, (SAMS) or the National Association of Marine Surveyors (NAMS). Purchasing a boat is a major investment and a marine survey may be the least expensive yet most valuable expense associated with your purchase. The marine surveyor you hire to inspect the boat should have the knowledge and expertise to determine if it has been properly maintained and in safe condition. A prudent buyer should make his final acceptance of the boat subject to the findings of a marine surveyor.