Your Insurer's Wreck Removal Clause, Explained

By Nadia Fournier, Marine surveyor and insurance adjuster. Reviewed by Amanda McCallister, editor.

Marine Salvage & Recovery | Hull & Bottom Cleaning I was standing on the fuel dock at Bradford Marine in Fort Lauderdale at 0530, watching a 62-foot Hatteras sink stern-first in her slip. A through-hull fitting failed in the generator room, and by the time I got the call, the cockpit was awash. The owner didn't ask about the hole. He asked who was going to pay to lift her off the spoil sand, and I don't mean the tow. Usually, that answer starts with the wreck removal clause in his hull insurance. It sounds simple, but the fine print and the interplay with P&I are where things get sticky. Let me walk you through it.

What the wreck removal clause actually says

Almost every commercial hull policy I survey includes a wreck removal clause. In the Institute Time Clauses Hulls, it's clause 10. In the American Institute Hull Clauses, it's a similar provision. The idea is that if your vessel becomes a wreck, the underwriter will pay for raising, floating, refloating, destroying, or otherwise disposing of the hull, and often for lighting and marking it while it's in the water. They'll do that only if the authorities require the removal, and usually only up to the policy's agreed value. Here's the catch: it's not an unlimited pot. Many policies cap recovery at the agreed value of the hull. So a 40-foot lobster boat insured for $300,000 might have $300,000 in removal coverage. That sounds like a lot until you hear what a crane barge costs for a week in a rocky anchorage. Depends on the plant. Also, the clause typically kicks in only after a 'wreck' exists. That concept has its own case law. If you're hard aground but not in peril, the clause may not trigger. And if you're able to refloat her, the clause works differently.

What it doesn't cover

First, it doesn't cover cargo. The clause may cover the cost of discharging cargo to get to the wreck, but not the value of the cargo itself. Second, it doesn't cover pollution. If diesel fuel is leaking, that's often covered by you as a pollution incident, and your blue card and P&I may respond, but the hull policy's wreck removal clause is not designed for the clean-up. Third, it doesn't cover damage you do to a third party's pier when the wreck shifts. That's collision liability, which is also a separate clause. And, crucially, it doesn't cover you if the wreck is not a hazard. If the vessel is lying in 50 feet of water in the middle of a designated anchorage, the authorities might not order removal for years. If the Coast Guard declares it a hazard, then the clause will respond. If they don't, the insurer may contest the claim.

A surveyor's role in the aftermath

Now, my part: after a sinking or grounding, I'm often ordered to survey the vessel in situ. That means getting on the wreck or diving it, assessing the hull's condition, the prop, the machinery, and the surrounding bottom. I report on whether the vessel can be refloated, whether it's a total loss, and what it would take to make it safe. That report goes to the adjuster, who uses it to decide whether the wreck removal clause is triggered and what the removal cost estimate should be. One digression: I did a survey in 2018 on a 75-foot tug that sank on the Mississippi River near Baton Rouge. The salvage company wanted $450,000 to lift her and remove her from the channel. The insured value was $400,000. The underwriter hired me to check whether a smaller crane could do the job. I spent a day on a bridge with a total station, then recommended a different salvage vendor who got it done for $220,000. That's the adjuster's job too. The wreck removal clause pays reasonable costs. The insurer will not write a blank check. They'll want competitive estimates, a method statement, and proof that the removal is legally required. That's where I come in.

P&I and the statutory liability

The hull policy pays for the physical removal of your own vessel. But if that wreck becomes a hazard to other vessels or causes a third party to lose money, you have a separate problem. That's where protection and indemnity insurance, or P&I, comes in. P&I covers your legal liability for wreck removal, particularly when the authorities order it under maritime law. In the U.S., the Wreck Act of 1899 makes the owner liable for removing a wreck that obstructs navigation. Some states have their own rules. That liability is routinely insured under a P&I policy. So if you're sitting in a harbor with a sunken boat, the conversation gets complicated. Your hull insurer will tell you to trigger the removal clause, but the government will send a notice that you must remove the wreck, and that notice often goes to the P&I underwriter. In practice, the hull adjuster and the P&I adjuster have to share information. The timing is critical. Now, if you don't have P&I, the Coast Guard can contract a salvage firm and send you the bill. That can be far more than the removal cost from a competitive quote. That's why a local commercial fisherman might have a $2 million P&I policy on a $400,000 vessel. It's not about the boat's value; it's about your liability.

What to do when it's your wreck

Here's the practical order after a sinking, if you can manage it. First, notify your hull underwriter and your broker within hours, not days. The policy generally requires notice 'as soon as possible.' Second, do not try to refloat the boat on your own unless you have a clear permit from the authorities and a reasonable plan. A failed refloat can turn a recoverable situation into a wreck, and the clause might be voided if you don't take reasonable measures. Third, gather evidence. Take photos, record the tide level, mark the position. That evidence is gold for the surveyor and adjuster. Fourth, let the insurance company recommend salvage contractors, but you have the right to negotiate. The clause requires them to buy the cheapest reasonable removal, so your use is a good surveyor's report. Remember, the wreck removal clause exists to clear a hazard, not to restore you to good fortune. It's a liability-driven cover. So the sooner you understand it, the better you can protect yourself and the waterway.

Frequently Asked Questions

If my boat sinks at the dock, does my insurance cover the removal? Yes, if it's a wreck and the authorities require removal. But the dock owner's property damage is a separate liability claim, and the removal itself is subject to your deductible and the policy's limits. If it's in a private slip and no one outside wants it moved, the insurer may only pay to discharge fuel and secure it. Does wreck removal come out of my hull policy limits? In many policies, the wreck removal cover has a limit equal to the insured value of the vessel, and it's an additional amount over a total loss. However, some policies have an aggregate limit for all claims, so you need to read the wording. Call it a separate sub-limit in most commercial hull forms. If a P&I policy covers wreck removal, do I need it in my hull policy? You usually have both. Hull covers the cost of physically removing the wreck from the water. P&I covers your legal liability to third parties, like a port authority, for clearing the wreck and for associated damages. They can overlap, but they're designed for different exposures. What if the Coast Guard orders me to remove the wreck but my insurer refuses to pay? Then you have a coverage dispute. You must still obey the order, or you face penalties. You can sue your insurer later. But don't ignore the order. That's a quick way to lose your business.