What Are Salvage Charges in Yacht Insurance?

What Are Salvage Charges in Yacht Insurance?

Salvage charges are the costs to save your boat after an accident, like towing it from a reef or pumping out water after a leak. Your insurance might pay these if your policy covers them—but there are rules. Here’s how it works.

Salvage Charges vs. Wreck Removal: What’s the Difference?

Salvage charges cover efforts to save your boat, like hiring a tugboat to free it from rocks or paying divers to secure it. Wreck removal, on the other hand, is when your boat is declared a total loss and needs to be removed (e.g., sinking in a marina). Most hull insurance policies pay salvage charges if you’re trying to save the boat, but wreck removal is often a separate coverage you may need to buy as an add-on.

Total Loss and Salvage: When Your Boat Isn’t Worth Saving

If your boat is too damaged to repair, insurers may declare it a *total loss* and stop paying salvage costs. For example, if a fire destroys the hull and it’s cheaper to scrap the boat than fix it, your insurer might pay you the agreed value (if you chose that option) and handle wreck removal. A *constructive total loss* happens when salvage costs alone exceed the boat’s value—even if it’s still repairable. In this case, you can “walk away” and get a payout instead of paying to save it.

Agreed Value vs. Actual Cash Value: How This Affects Salvage Payouts

If your policy uses *agreed value* (you and the insurer set a price upfront), you’ll get that full amount if the boat is totaled, and salvage costs might be covered up to that value. With *actual cash value* (ACV), payouts are based on the boat’s depreciated worth, which could mean lower salvage coverage. For example, a 10-year-old $500,000 boat with ACV might only get $300,000 if wrecked—and salvage charges would count against that limit.

• Salvage charges apply if you’re trying to save your boat (e.g., towing, emergency repairs).
• Check if your policy includes wreck removal coverage for total losses.
• Agreed value policies often provide clearer payouts for salvage and total losses than ACV.
• Deductibles may apply to salvage costs—know how much you’ll pay out of pocket.
• Some policies exclude salvage if the accident involves pollution (e.g., fuel leaks).

Take action: Review your policy’s “salvage and wreck removal” clause to confirm coverage limits, and choose agreed value if you want predictable payouts for major claims.