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Catalina/Capri 25/250 Sailor's Forums

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What do they mean by "replacement value"

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delliottg
Former Mainsheet C250 Tech Editor

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USA
4479 Posts

Initially Posted - 02/07/2009 : 21:49:59

I've read a number of ads on Craigslist where they cite a "surveyed" value of say $60k, then they say the "replacement value" is $550k (not cost). I don't understand how the survey value can be 1/10 the actual value unless the boat's a heap. The boats in general look like they're in good shape for the most part. Can someone explain how this works?

Example:

<blockquote id="quote">quote:<hr height="1" noshade id="quote">
36'lod (40'+ with sprit), 12'-2" beam 5'-6" draft. Universal m-35 diesel (low hours)90 gal fuel, 125 gal water. Pressure water, hot water heater, Heart inverter, DC refridgeration (compressor/raw water cooled). Hot and cold shower in cockpit. Sails good, paint good

Strip planked mahogany (covex/concave)bronze fastened to Dbl. Sawn white oak frames at 17" o.c.

Gorgeous boat. Originally commissioned to be built for Lana Turner. Extremely well built by "Maas Brothers" yard in Breskens Holland. Very well maintained.
Recent survey values her at $65k with a replacement value of $550k... <hr height="1" noshade id="quote"></blockquote id="quote">

David
C-250 Mainsheet Editor

Sirius Lepak
1997 C-250 WK TR #271 --Seattle area Port Captain --

Edited by - delliottg on 02/07/2009 21:52:04

bren737
Captain

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291 Posts

Response Posted - 02/07/2009 : 22:02:11

David,

As I understand it, for older vessels, there's the actual 'market value' of the boat (the realistic price you could expect to get in today's market) and then there's the 'replacement value' (what it would cost in today's dollars to build the same vessel with today's prices for labor, materials, etc.).

I encountered this when I bought my Passport. Being an '83 model, I was quoted an asset value based on comparable Passport 40s on the market at the time. However, the cost of building a 'new' P40 of the same specs in today's dollars was listed at about three times what the market value would bear. The costs of teak, bronze, etc. in today's terms makes that sort of boat (new) ridiculously expensive!

Even for newer boats it's sometimes confusing. A buddy has a custom built 34 ft Channel Cutter. He has about $150K of materials in it but had some of it built in South Africa and then finished it here in the States himself. He had to drop the insurance because they said the replacement value was about $500K!! He couldn't afford the insurance once it was completed because he couldn't find anyone who would cover it for just what he had in it. They all insisted on 'replacement value'; which of course was at a MUCH higher rate. Fortunately, I didn't have that problem.

Hope that helps. . .

Edited by - bren737 on 02/07/2009 22:11:58

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 02/07/2009 : 22:24:36

I'm surprised that guy with the Channel Cutter couldn't insure it for an "agreed value"--that's what I've always done. My current "agreed value" (a number I specified, but which can't be above appraised value) is less than replacement, but close to resale market value. I picked it to protect me from total loss without costing a ridiculous amount. It's all about the ability to cope with risk--if the boat is lost, is that devastating to your life, or just a disappointment? Is it a financial disaster, or just a dent in your finances? What kind of financing do you have to be able to cover, and do you really need insurance to do it (at a cost)? "Agreed value" lets you make your own compromise based on those factors.

Edited by - Dave Bristle on 02/07/2009 22:25:11

crystal_blue
1st Mate

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USA
64 Posts

Response Posted - 02/07/2009 : 23:13:29

As I understand it, for older vessels, there's the actual 'market value' of the boat (the realistic price you could expect to get in today's market) and then there's the 'replacement value' (what it would cost in today's dollars to build the same vessel with today's prices for labor, materials, etc.).

That's pretty much it. In law school they explained it with a case where a couple leased out their farm to coal miners, on the understanding that after mining operations had concluded the mining company would do environmental restoration work. The miners backed out of the deal (after trashing the land) because the cost of restoring the land would be two or three hundred thousand dollars whereas the farmland itself was only worth five or six thousand dollars.

--Jim

Edited by - on

delliottg
Former Mainsheet C250 Tech Editor

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USA
4479 Posts

Response Posted - 02/07/2009 : 23:40:33

Ah, OK, I get it. Replacement value is the cost to build the same boat at current prices.

As far as "agreed upon value", I have this with my insurance company to cover the base price of the boat & trailer plus all the extra sails, new engine, etc. I increased my agreed upon value last year by about $4k, no questions asked by Progressive, and the difference in price was negligible.

Edited by - on

britinusa
Web Editor

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USA
5404 Posts

Response Posted - 02/08/2009 : 08:38:06

Bren, replacement value... if you replaced your 83 passage, the last one was built in 2000. So replacement would be
[url="http://www.yachtworld.com/core/listing/boatFullDetails.jsp?boat_id=1951986&checked_boats=1951986&ybw=&units=Feet&currency=USD&access=Public&listing_id=32744&url="]this.[/url]

You probably couldn't buy that much cabin wood today!

Paul

Edited by - on

delliottg
Former Mainsheet C250 Tech Editor

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USA
4479 Posts

Response Posted - 02/08/2009 : 10:17:38

Now that is a pretty boat. Fabulous joinery on the insides.

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 02/08/2009 : 11:05:19

<blockquote id="quote">quote:<hr height="1" noshade id="quote">Originally posted by britinusa
 Bren, replacement value... if you replaced your 83 passage, the last one was built in 2000. So replacement would be
[url="http://www.yachtworld.com/core/listing/boatFullDetails.jsp?boat_id=1951986&checked_boats=1951986&ybw=&units=Feet&currency=USD&access=Public&listing_id=32744&url="]this.[/url]<hr height="1" noshade id="quote"></blockquote id="quote">I dunno... I think if you've been paying for "replacement value" you're paying for a replacement by "comparable" new boat--something like the [url="http://www.morrisyachts.com/Morris-38"]Morris 38[/url]... No?

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bren737
Captain

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291 Posts

Response Posted - 02/08/2009 : 16:28:22

Paul,

Pretty darn close, in fact, they look a LOT alike on the inside, but I've got a Pass-port, not a Pass-age.

You're right, though, LOTS of wood which would make her WAY out of my price range new! Here's some of Fiato's innards. . .

She's got teak side decks, too!

--------------------------------

Dave,

I think the issue with my buddy's Channel Cutter is that it's registered in Gibraltar and spends much of it's time in the Bahamas and BVI. Seems like they would surely be willing to insure for a lesser 'agreed value.' Not sure what the rub is.

BTW, love that Morris 38! Sweetness. . .

Edited by - on

Steve Blackburn
Master Marine Consultant

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Canada
1091 Posts

Response Posted - 02/08/2009 : 17:18:55

Hey Bren, you sure have a good looking boat. It looks brand new. I bet you put lots of work getting it to that point for an 83. That's the type of boat I see myself owning someday.

About the last fast passge. I wonder if the workers knew at the time that this was going to be the last and put an extra effort on the jointry and all.

Edited by - Steve Blackburn on 02/08/2009 17:19:52

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 02/08/2009 : 20:59:41

Bren: Gorgeous!

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 02/08/2009 : 21:36:41

Replacement value is based on buying a new vessel with the same equipment. My massive Barrient 32 electric winches, below decks hydraulic AP, SSB with modem packet, full instrumentation and radar, massive electric windlass with 10 mm chain and windvane all cost more to purchase and install than the 50k boat we bought, so she has a replacement value of $350K. That's how it works. Sure, we could buy another boat for 50K, but it probably would not come with all of the aforementioned toys.

Sten

DPO Zephyr - '82 C25, FK, SR
SV Lysistrata - C&C 39 - going "home" in a couple of weeks! Hope I remember how to sail!

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bren737
Captain

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291 Posts

Response Posted - 02/09/2009 : 06:45:03

Steve, Dave:

Thanks; she is a sweetie and sails just as nice. Smooth as butter.

Wish I could take credit for her preserved status but she was incredibly maintained by her former owners (friends of my buddy with the Channel Cutter) and they had cruised/lived aboard for the nine years prior to my buying her. Mostly it's just been maintenance and updating some older equipment for me.

Edited by - bren737 on 02/09/2009 08:05:11

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