CARIBEX MARINE

Financial Services

 

Boats, yachts and ships- Financing Specialists with the Most Competitive Rates in the Marine Industry.

 We have the marine industry experience, unparalleled market knowledge, and personal customer service to help builders and clients throughout the process.

Our team specializes in boat, yacht and ship loans, financing, re financing and purchase lease-backs for all registered vessels. We offer competitive rates and long-term financing for loan and lease-worthy clients.

 

Our customers come to us for:

•           New ship, boat, yacht, power and sail loans

•           Used boat and used yacht loans

•           Refinancing existing boat loan

•           Extended warranty protection

 

        Our Financial Services Provide:

•           Quick approvals

•           Competitive rates

•           A Simple application process

•           No-hassle closings

•           Unsurpassed marine industry knowledge

•           Personalized customer service

•           Terms up to 20 years

 

CONTACT

 CARIBEX MARINE, INC.

CAPTAIN ROBERT J. FIRTH

Boca Raton Florida, USA

www.caribexmarine.com

rjfirth@caribexmarine.com

  PH & text 954 683 0824

 

SOME DETAILS AND CONSIDERATIONS OF YACHT FINANCE AND INSURANCE

 

SuperYachts owners seeking finance generally (not always) fall into two groups: those who require a loan to close and those who in fact have the funds but want to free up investment capital for their various business projects.

Most lenders favor the latter group: they just don't like to lend to those who don't already have sufficient funds or assets. The most basic reason for this is that no yacht can be sold for what is purchased at. Lenders and most business minded people also know this. Lenders ultimately base their decisions on default. What can they recoup if the deal goes south?  

The lender of course, has a lien on the boat but, depending on the down payment there may not be enough left after the sale to recover the loan. Also, repossessing any asset is complex, expensive and many times the costs are greater than the value of the asset. If they have a PG (personal Guarantee) they can go after a deficiency judgment against the owner- but, unless he has sellable assets, that's not always the answer. 

Any creative lender presented with a decent client who wants a large vessel but just can't afford to go out and buy it can help his client by building a leasing structure which can be used to 1) avoid the payment of value added tax (VAT) on yachts in the European Union (EU) and 2) makes the vessel (or any asset) far easier to repo. The client has his boat while the lessor OWNS it.  

A smart lessor will also use a recruiting agency to crew the vessel and include those costs into the lease payment. If the deal doesn't work out- the crew will simply be instructed to deliver the yacht as instructed by the lessor- a much better alternative. The security deposit which is retained as liquidated damages and so spelled out in the lease, gives the lessor perhaps six months to advertise and re-lease or sell the asset and the Lessee doesn't have his reputation damaged as he would in a default repo situation. 

Marine mortgages: When buying a completed build (whether new or used) the best form of security from the bank's point of view  is the "preferred ships mortgage," registered on the yacht in her flag registry, by which title is conveyed to the lender, but which becomes void under certain pre-determined circumstances. 

Because the mortgage is automatically governed by the law of the vessel's flag, the choice of registry is a key factor in planning as it affects the ease with which it may be purchased by another party or repossessed by the lender in the event of default.

Other forms of security can include assignments and pledges, although, unless a pledged asset is a sellable security of some sort valued equally to the loan, these are generally considered to be less effective. When the only hard asset posted as security is the vessel itself, a personal or corporate guarantee will normally be requested and required. 

The lender may also require charter money and any insurance pay-outs to be paid directly to him first, and also to be named as the loss payee on the yacht's insurance policy. The vessel also must normally be maintained to certain standards, with surveys and independent valuations being carried out from time to time.  

Although it is not easy to think of yachts as being ships, that is exactly what they are in the eyes of the law. The mortgage (loan doc) should be reviewed and approved by experienced shipping lawyers coupled with a knowledgeable marine banking specialist such as Caribex Marine so as to avoid common pitfalls for both buyer and lender promoting settlement over argument, saving many legal costs while maintaining good relations among the parties. 

By convention, mortgages are governed by the law of the country where the yacht is registered, and there may be no way round this under the law of that flag state.

Legal VAT avoidance For owners, perhaps the greatest benefit to be gained from financing, is that it can form the basis of a structure for the effective avoidance of VAT. For those sad owners falling into the VAT trap, it is sometimes possible not to pay this by relying on temporary importation provisions, which allow those resident outside the EU to use yachts in the EU for up to 18 months. However, the application of this rule, especially the definition of residency, varies across Europe. Those owning real property or with family or business connections in Europe may well be caught out. 

Tax-avoidance experts are forever thinking-up new stratagems and schemes to help their clients work their way around the complex legislation and ever more greedy and needy governments. Tax authorities are, of course, aware of this, and frequently issue guidelines condemning this scheme or that. So cautious buyers may prefer a scheme which only reduces or defers tax payments. But even such less aggressive schemes are neither simple nor cheap, requiring expert knowledge and management. The simplest solution of course is to register the vessel in a VAT and TAX exempt location under a "distant" company and just "lease" it for any use in EU waters. 

Privacy issues: Many owners are concerned about privacy, personal security and law suits. Having a bank ( lessor)  as the owner of their yacht can help guarantee less or none of these problems more effectively than one might by just using an owning the vessel under ones name or under one's company or a trust. Aggrieved parties will then just be refereed to the lender which will generally get them nowhere.

The corporate veil provided by an owning company can be lifted and trusts can be set aside under certain circumstances. When the yacht is mortgaged to a bank, that bank will often rank higher (be in a first position) above the claims of  lesser creditors bringing an action against the ship's owner. Depending on the jurisdiction in which the legal action is taken, this helps to "ring-fence" the yacht. Leasing arrangements are often made by owners based in the US with these concerns alone in mind. Caribex Marine in fact has perfected such leases. 

It must be noted, though, that no legal structure can ever remove the possibility of a claim being brought against the yacht itself, as a result of liens arising from unsatisfied claims by suppliers, crew members  or physical damage to a guest for example. These could result in the detention of the yacht or, when large enough, ultimately force a judicial sale, for which any bank would doubtless want redress. This is highly doubtful however, as for most of such claims the ships liability insurance provides protection while recorded liens are often uncollectable in many offshore venues. In any case, all large vessels should have a good marine lawyer under retainer at all times. 

Other financing sources; It is, of course, always possible to borrow the money and secure the loan posting assets other than the yacht. Different lenders, of course, cater for different amounts of loans. In general, the larger the amount of funds provided, the more flexible the terms may be. The possibility of being able to build a wider relationship with very wealthy clients can be a advantage to lenders and acts as a trump card to be played deftly by sophisticated buyers and their management staff. 

Caribex Marine believes that significant future growth lies in marine finance especially for SuperYachts which provide there owners safe -haven and extraordinary comfort and communication capabilities no matter where in the world they may be. 

Purchasing insurance policies and coverage for your SuperYacht, such as hull and protection and indemnity insurance, isn't just a necessary expense, it is one that should be given considerable attention. One common misconception is that the insurance policy is a simple, all-encompassing document that can be purchased and forgotten until it's needed. On the contrary, insuring your yacht is a multi-faceted consideration and the policy is a contract that begins an active, ongoing relationship with your insurance provider.

Since 2008, many insurance policies have been purchased based on price alone, oftentimes at the advice of someone who does not have expertise in the specialized world of SuperYachts insurance. 

Caribex Marine cautions owners against working with any insurance broker who is not a specialist in this particular field. It takes considerable knowledge and experience to properly design a policy for an oceangoing SuperYacht. A general personal or business insurance broker is not best positioned to do so. The policy is in essence a multimillion-dollar contract and should be treated as such. The biggest pitfall, according to most insurance companies, comes from an owner not reading, questioning or understanding the exclusions and restrictions in the insurance contract. (weasel words)  Every policy is different and confusion can arise from not understanding exactly what is covered and when it is covered.  

Caribex Marine understands the wording and is here to review any policy on behalf of our client. Also, even if an owner pays cash for his vessel, it's not a bad idea to (transfer ownership) to a leasing company either by re-financing or sale and leasing it back for use. The leasing company then will also have their specialists review the policy to insure all parties are fairly covered. 

An All-Risk  policy, for example, says everything is insured unless the underwriter says it's not, while a Named Perils policy lists those specific things that are covered. With a Named Perils policy, the onus is on you as the owner to prove that one of those perils occurred, With an All-Risk policy, you have a valid claim, you submit it, and, worse case scenario, it's up to the insurance company to prove that the 'excluded' happened - the onus is on them. If your boat sinks in deep water, for instance, and you have a Named Perils� policy, you must prove which of the named perils caused the boat to sink. This could be very difficult to prove and delay the entire process, making it a legal process instead of a straightforward claims settlement.  

Caribex Marine personnel worked for a Lloyds broker for some years and can say, if you didn't know, that the basis for any insurance company to exist is not to be in the business of paying claims. The basis for any insurance companies is to collect premiums ! Quite the opposite!  

Don't take the term all-risk too literally. There is no policy that covers every peril, stresses- There will always be named exclusions. Many policies also exclude claims due to wear and tear, not only of the broken part itself, which might be small, but also of the larger consequential damages. You assume that your engineer and crew are looking at every square centimeter of the yacht to ensure there is not some small part starting to show signs of wear, but might they miss something? Some policies specify that if something on board is damaged (worn) and needs to be replaced, only a percentage of the new item will be covered. These examples go on and on, but being clearly informed about the terms and conditions of your policy will ease the process in the event there is a claim. 

The Unwritten Expectation of Seaworthiness; Most prudent buyers will hire a surveyor to examine the yacht thoroughly prior to purchase to expose deficiencies and items that may render the vessel unseaworthy. The survey is not only used as a negotiating tool between the buyer and seller, it is also often considered by an insurance underwriter to understand the vessel's state. Caribex Marine knows the ship yacht and boat survey business!   

Policy issuance may be contingent on the client addressing recommendations stated in the survey within a reasonable time. Underwriters will always ask for a copy of the survey  and require written confirmation that recommendations have been complied with prior to commissioning the vessel. If we are involved we always recommend documentation, such as receipts, photos and a follow-up written confirmation from the surveyor to be afforded the underwriter and maintained in the ships documents. 

Captain and crew considerations; Most yacht policies will warrant a qualified captain� be in command of your vessel. Lloyd points out that an underwriter will generally define a qualified captain as someone with a minimum of two years experience as a captain (not as housekeeper/captain or mate/captain) aboard a similar-sized vessel to the one they are applying for. The underwriter also will review any insurance claims wherein the captain was in command. 

Some yacht policies have Named Operator limitations where coverage will only be provided if the insurance company has the opportunity to review the crew's qualifications. Named Operator warranties are usually on high-performance boats, but may be stated on vessels that achieve speeds in excess of 35 knots such as most modern twin and triple engine centre consoles. 

In addition to the captain, underwriters generally also want to know how many crew members are employed, and some will request the nationality of the crew. If you pick up part-time crew, it is always advisable to let your agent know ahead of time. The cost of insuring additional part-time crew is minimal when you weigh the potential risk of being liable for an injured crewmember not declared on your yacht policy.� 

Refit/Repair time: Carefully review how your yacht and its contents are covered during a refit or routine maintenance period. It seems that yards are limiting their liability to ever-increasing degrees. We always have our clients underwriter and attorneys analyze the yards insurance policy to ensure it is reasonable. We then negotiate the terms to better suit our clients needs. If that is not possible, we seek a different repair/refit facility.� 

Of late, yacht hull underwriters have exercised a concern with regards to "hot work" defined by the Occupational Safety and Health Administration (OSHA) as riveting, welding, flame cutting or other fire or spark-producing operation performed aboard a yacht. Anytime your yacht heads into the shipyard, it is a good idea to review the work schedule with your insurance agent. Based on the OSHA definition, repair work like taking an angle grinder to a piece of metal and making a spark is  "hot work" and therefore may be excluded. Why? Because in such work several very expensive yachts have burned to the waterline and sunk and the yards have seen their premiums increased and at times cancelled. Caribex Marine always assigns a marine maintenance specialist to oversee any yard work on vessels it manages. 

Towed tender exclusions: Tenders these days are sleeker, bigger, faster and more expensive. In many cases, towed tender claims are eclipsing all other physical damage losses on yachts. Equipment failure, broken towing eyes, insufficient means of monitoring the tender's bilge, and an occasional curiosity seeker getting in between both vessels are a few of the more colorful claims. 

Exercising due diligence will help in alleviating claims exclusions and avoid that grey area that may end with a claim being decided by a court. Generally, underwriters do not want the length of the towed vessel to exceed 20 percent of the towing vessel. When quoting a yacht insurance policy, underwriters will read the information you provide on the towed tender and make a decision to offer either full coverage or coverage with restrictions, which could include limitations such as a 50 per cent deductible while under tow, no nighttime towing, mandatory professional tow bridle, proper lighting, additional battery power or even be outfitted with GPS tracking systems. 

If you have your heart set on a larger tender and to help reduce your chance of a claim,� the captain should have some experience towing a tender. The towing vessel and the one behind should be equipped with the best towing hardware available and incoming water should have an easy means of exiting through self-bailing cockpit drains. 

Education is what you get when you read the fine print; experience is what you get when you don't. Being properly informed about your policies caveats and coverage can eliminate a lot of headaches. Remember the underwriter is not in the claims paying business! 

Our advice is to keep your insurance broker up to date on everything the yacht is planning on doing. Maintaining the open and active relationship with your underwriter and exercising common sense will help in alleviating claims exclusions and avoid that grey area that may end with a claim being decided by a court. The ship's captain should be able to comprehend every word of your policy and advise you or our staff of any deficiencies or any un-advantageous areas.