MyYachtsInsurance - Yacht Insurance Community

Reviewed by Alex Short, Independent Yacht Insurance Risk Analyst

TL;DR

Salvage and wreck removal are typically covered under Protection and Indemnity (P&I) insurance, not hull and machinery policies. Coverage is excluded under hull policies by clauses such as the "general average security exclusion" and "salvage liability exclusion" [IHC-2003]. Coverage under P&I is triggered when a vessel requires salvage or wreck removal due to an incident at sea, provided the event complies with the International Convention on Salvage 1989 [SALVAGE-CONV-1989] and is not excluded by the policy’s environmental liability carve-out [OPA-90].

Trigger Conditions

Trigger	Policy Impact	Consequence
Salvage operation not conducted under York-Antwerp Rules 2016 [YORK-ANTWERP-2016]	General average adjustment clause	Excluded
Vessel involved in salvage not compliant with International Convention on Salvage 1989 [SALVAGE-CONV-1989]	Salvage liability clause	Excluded
Wreck removal delayed beyond 30 days without insurer notification	Time-sensitive salvage clause	Coverage void
Salvage costs exceed 15% of vessel value without P&I approval	Salvage cost cap clause	Excess amount excluded
Vessel operator fails to notify wreck removal under Oil Pollution Act of 1990 [OPA-90]	Environmental liability carve-out	Coverage void

Underwriter's Checklist

[Salvage Agreement]: Verify the use of Lloyd's Standard Form of Salvage Agreement (LOF 2020) [LLOYDS-OPEN-FORM] to ensure compliance with international salvage practices and to define the terms of salvage operations.
[Wreck Removal Plan]: Confirm the existence of a documented wreck removal plan that aligns with the International Convention on Salvage 1989 [SALVAGE-CONV-1989] and the Oil Pollution Act of 1990 [OPA-90], particularly for vessels operating in environmentally sensitive areas.
[Class Certificate]: Review the vessel’s class certificate to confirm it is valid and issued by a recognized classification society, ensuring compliance with IACS Unified Requirements W [IACS-UR-W] and other structural standards.
[General Average Security]: Check for evidence of General Average security under the York-Antwerp Rules 2016 [YORK-ANTWERP-2016], including any required deposits or guarantees, to ensure proper coverage for salvage and wreck removal costs.
[Crew Qualifications]: Examine crew credentials under 46 CFR the corresponding regulatory requirements [46-CFR-10] to verify that all personnel involved in salvage or wreck removal operations are properly licensed and trained.
[Vessel Maintenance Log]: Review maintenance logs to confirm that the vessel has been regularly maintained and complies with 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26] for uninspected vessels or relevant SOLAS standards for inspected vessels.
[Loss History Declaration]: Obtain a detailed loss history declaration to assess the vessel’s prior salvage or wreck removal incidents, which may influence risk assessment and premium calculation.
[Navigation Area Endorsement]: Confirm that the vessel’s insurance policy includes the correct navigation area endorsement, ensuring coverage for salvage and wreck removal in the regions where the vessel operates.
[Refit/Modification Records]: Review refit and modification records to ensure that any structural or operational changes to the vessel comply with IMO MSC guidelines [IMO-MSC] and do not compromise salvageability or wreck removal capabilities.
[Survey Report]: Analyze the latest survey report to assess the vessel’s condition and value, ensuring it meets the requirements of the International Hull Clauses (01.11.03) [IHC-2003] and supports the underwriting of salvage and wreck removal coverage.

Policy Wording Traps

Clause Type	Trap Mechanism	Scenario	Coverage Result
Salvage Exclusion	Excludes salvage costs if caused by "inherent vice" or "gradual deterioration"	A vessel carrying cargo with a latent defect causes a spill requiring salvage operations [IHC-2003]	Salvage costs denied due to latent defect carve-out
Wreck Removal Exclusion	Excludes coverage for wreck removal if the vessel is under "care, custody, and control" of the insured	A vessel is abandoned in a foreign port and the insured arranges for wreck removal [OPA-90]	Wreck removal costs denied due to failure to notify insurer
Faulty Workmanship Exclusion	Excludes salvage costs arising from "faulty workmanship"	A vessel's hull fails due to poor welding, leading to a casualty requiring salvage [IACS-UR-W]	Salvage costs denied due to faulty workmanship exclusion
Contractors' Exclusion	Excludes coverage for salvage performed by third-party contractors not approved by the insurer	A vessel owner contracts a local salvor not listed in the policy, leading to a dispute [LLOYDS-OPEN-FORM]	Salvage costs denied due to unauthorized contractor
Material Change Warranty	Denies coverage if the vessel's use or structure is altered without insurer consent	A vessel is modified for offshore operations without notice, and requires salvage [46-CFR-10]	Salvage costs denied due to material change breach
Wilful Misconduct Exclusion	Excludes coverage for salvage if the loss is due to "wilful misconduct"	A crew member intentionally grounds the vessel to avoid a storm, leading to salvage [IMO-MSC-CIRC-1515]	Salvage costs denied due to wilful misconduct clause

Operational Reality

Yard operators often delay initiating salvage or wreck removal procedures until after underwriters have been notified, which can lead to disputes over coverage timelines [IHC-2003]. Owners frequently fail to document the exact time and cause of the incident, which is required for salvage claims under the York-Antwerp Rules 2016 [YORK-ANTWERP-2016]. Surveyors are typically engaged after the initial salvage operation to assess damage and determine the applicability of general average, but their involvement is sometimes delayed due to logistical bottlenecks at the yard. Documentation must include a salvage agreement, such as the Lloyd's Standard Form of Salvage Agreement (LOF 2020) [LLOYDS-OPEN-FORM], and a detailed report from the class society. Common mistakes include omitting the exact time of the incident or failing to secure a properly executed salvage contract, which can result in coverage denial. Underwriters may also require a report from the Coast Guard under CFR 33 if the incident involves environmental concerns [USCG-CFR33]. The timing of notice to the underwriter is critical, and delays can trigger policy exclusions. Surveyors must be notified typically within the policy notification period, which varies by insurer but is often aligned with the timeframes specified in the policy wording.

Related Risks

Failure to comply with salvage obligations under the International Convention on Salvage 1989 [SALVAGE-CONV-1989] → May trigger General Average adjustments under York-Antwerp Rules 2016 [YORK-ANTWERP-2016], impacting shared loss apportionment among stakeholders
Non-coverage of wreck removal costs under International Hull Clauses (01.11.03) [IHC-2003] → Could result in uncovered liabilities under the Oil Pollution Act of 1990 [OPA-90] for environmental cleanup
Exclusion of uninspected vessels under 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26] → May leave salvage and wreck removal expenses uninsured in cases involving non-compliant or substandard craft
Breach of salvage warranties under Lloyd's Standard Form of Salvage Agreement (LOF 2020) [LLOYDS-OPEN-FORM] → Could lead to disclaimers under adjacent policy sections, particularly if salvage operations exacerbate hull or machinery damage not covered under Institute Time Clauses Hulls (1.10.83) [ITC-H-1983]

Questions for Your Broker

Does the policy specify coverage limits for salvage and wreck removal under General Average terms, and are these aligned with the York-Antwerp Rules 2016 [YORK-ANTWERP-2016]?
Are salvage and wreck removal operations excluded under the policy for uninspected vessels, particularly those subject to 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26]?
What are the required notification procedures for salvage and wreck removal claims under the policy, and do they align with the Oil Pollution Act of 1990 [OPA-90] reporting standards?
Does the policy require specific documentation, such as a Lloyd's Standard Form of Salvage Agreement [LLOYDS-OPEN-FORM], to substantiate salvage and wreck removal claims?
Under what conditions does the deductible apply to salvage and wreck removal costs, and is this consistent with the International Convention on Salvage 1989 [SALVAGE-CONV-1989]?
Does the policy require compliance with warranty clauses related to vessel seaworthiness, and how are these assessed under the International Hull Clauses (01.11.03) [IHC-2003]?

References

International Hull Clauses (01.11.03) (framework) — http://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/International%20Hull%20Clauses%202003.pdf
International Convention on Salvage 1989 (legal) — https://www.dco.uscg.mil/Portals/9/CG-5R/nsarc/Convention%20-%20Salvage%20(1989).pdf
Oil Pollution Act of 1990 (legal) — https://www.govinfo.gov/content/pkg/COMPS-2991/pdf/COMPS-2991.pdf
York-Antwerp Rules 2016 (General Average) (framework) — https://comitemaritime.org/wp-content/uploads/2018/06/2016-York-Antwerp-Rules-with-Rule-XVII-correction.pdf
Lloyd's Standard Form of Salvage Agreement (LOF 2020) (framework) — https://www.lloyds.com/market-resources/salvage-arbitration-branch/lloyds-open-form-lof
IACS Unified Requirements W (Welding) (class) — https://iacs.org.uk/resolutions/unified-requirements/ur-w/
46 CFR the corresponding regulatory requirements: Operations (Uninspected Vessels) (legal) — https://www.ecfr.gov/current/title-46/chapter-I/subchapter-C/part-26
IMO MSC (framework) — https://www.imo.org/en/OurWork/Safety/Pages/default.aspx
IMO Cyclone Guidance (framework) — https://www.imo.org/en/OurWork/Safety/Pages/Cyclone.aspx
CFR 33 (legal) — https://www.ecfr.gov/current/title-33
Institute Time Clauses Hulls (1.10.83) (framework) — https://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/Institute%20Time%20Clauses%20Hulls%201.10.83.pdf

Disclosure

This content is provided for informational purposes only and does not constitute insurance advice. Coverage terms vary by policy, jurisdiction, and underwriter. Consult a licensed marine insurance broker for guidance specific to your vessel and operations.

Mandatory Coverage for Salvage and Wreck Removal in Marine Insurance