VALUATION SURVEYS
These can usually be undertaken at a modest cost on most vessels. A valuation survey would generally be required for marine mortgage purposes and insurance cover purposes. However obviously, it is impossible to be totally accurate on these as the value of the vessel is determined on the state of the market at that time, the condition of the vessel, the urgency to sell and so many other factors.
By doing a limited amount of investigation into the existing market an appraisal can be arrived at. Things to be aware of in valuations are that the insurance company most likely would not settle an inflated valuation in the case of a write off or total financial loss and would use their own valuers to come up with a figure
| Valuation versus restoration value |
This figure will often be below the insured value and, although there may be some room for negotiation, an owner may wish to consider setting a more realistic valuation on the vessel in the first place as, a high unrealistic valuation merely causes increased premiums throughout the life of the insurance for no gain whatsoever. This is an area where an experienced surveyor can be of assistance.
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The other contentious area with regard to valuations is, in some cases, particularly with restoration work, it is often encountered that the cost of restoration exceeds the total value or re-sale of the vessel by a good margin. Unfortunately, there are few insurance companies that will accept cover on this cost of restoration value. In some cases, the cost of restoration can exceed the true value of the vessel by over 300%. So, one point to be aware of before setting out on a restoration is that the vessel may never ever be worth the cost of this restoration in the secondhand market. However, the ownership of a special vessel does not always come down to value alone.
VARIATION POLICIES
There are one or two insurance companies that operate an additional service known as a variation policy.
My understanding of this is that some of the capital costs of purchase of items such as:
- engines
- specific machinery and installations
- masts and spars
These can be insured separately if these in themselves constitute a major increase in cost over and above the insured value. Individual companies operate different rules and it would be wise to make specific enquiries if this would be of interest. However, it is particularly difficult or impossible to get the cost of purchased labour included in these policies.
ONE OFF VESSELS
In the case of one off vessels where there is no existing market or similar vessels to make a judgment by, then the experience of the surveyor/valuer is of paramount importance. In all cases, the surveyor will try to work with the owner of the vessel to achieve an acceptable solution.
Valuation surveys can never guarantee that the vessel will achieve the valuation price have but will try to reflect the replacement value of a similar vessel.