A bank needs a defensible number with the working shown: market value, usually forced-sale value, a stated valuation method and a condition grade that supports it. An underwriter needs a defect list that predicts the next claim, with recommendations carrying deadlines.
Credit committees and underwriters reject valuations for being unsupported far more often than for being wrong. The fix is not a higher number; it is showing the reasoning.
The three valuation methods
| Method | Best used for | Weakness |
|---|---|---|
| Comparable sales | Production yachts, standard workboats with a liquid market | Thin or unreliable evidence in Indonesia for one-off and traditional hulls |
| Depreciated replacement cost | Traditional phinisi, LCTs, purpose-built workboats with no comparable market | Depends on current build cost data and a defensible depreciation view |
| Income capitalisation | Vessels with verifiable contracts and running costs | Only as good as the contract and cost evidence actually shown to the surveyor |
What the report must state
- Which method led and why, with the other methods used as cross-checks.
- Market value and, where required, forced-sale value — both dated.
- The condition assumed, tied to the condition grading in the same report.
- What was not inspected, explicitly.
- The comparables used, with their sources and dates, or the replacement cost basis.
- Whether the vessel’s certification and class status support continued trading.
- Any encumbrance or registration observation, flagged as an observation rather than a legal opinion.
What underwriters look for
A different emphasis: recommendations with deadlines, evidence that previous survey recommendations were closed out, LSA and firefighting currency, lay-up history, and whether the vessel’s trading pattern matches what was declared. An underwriter reading a report is asking one question — what causes the next claim on this vessel — and the report should answer it directly.
Get the lender’s requirement first
Lenders differ on three points that change the engagement: whether forced-sale value is needed alongside market value, whether the report must be addressed to the bank rather than to the borrower, and how recent it must be at drawdown — commonly three to six months. Send us the requirement letter before we quote and the report will land right first time.
Frequently asked questions
Is a marine survey mandatory for insurance?
Not by statute, but underwriters routinely require a condition survey above a certain vessel age or value, and almost always on renewal after a claim.
How recent must a valuation be for financing?
Usually within three to six months of drawdown, but the lender decides. Ask them before instructing.
Can you re-inspect to close out recommendations?
Yes — a short close-out attendance produces a dated addendum the underwriter can attach to the original report.