Salvage and its pitfalls

Any skipper in an emergency situation and needing outside help generally has other worries at the time rather than wondering about salvage costs and other consequences. The skipper’s first priority will be to avert the imminent danger.

However, in the aftermath, the costs for a salvage operation could be surprisingly high.

In principle, anyone who successfully helps another vessel in distress at sea is entitled to salvage costs. Ultimately, the salvage measures avoid greater damage to, or even total loss of the yacht, and the danger of polluting the environment or obstructing the shipping lanes can be averted.

Salvage fees can amount up to 100% of the yacht’s value and – to ensure payment – can lead to the salvaged yacht being impounded. In this event, guarantees must be made by the insurer in order for the yacht to be released. Negotiations over the final salvage fee end up before local courts and such cases often drag out for years.

Fees for salvage and assistance towing are regulated by an international convention on salvage at sea. According to this convention, numerous criteria influence the way the salvage fee is calculated, including the total value of the items saved, the effort and risk involved on the part of the salvor, the weather and regional conditions and the precise salvage measures taken. The extent of the potential environmental impact may also be a factor.

As a customer of Pantaenius you do not need to worry, because salvage costs are fully covered by the Hull policy, in cases where there is an immediate threat of damage. This policy provides an unlimited amount of cover and no excess is applicable. However, so as not to jeopardise the insurance cover, it is strongly advised that you do not negotiate salvage fees. It is more sensible to contact the insurer as quickly as possible and let them deal with the negotiations. In no circumstances should you discuss specific amounts or the yacht’s value, nor should you sign any agreement. The claims staff at Pantaenius are available round the clock and have wide-ranging experience of how to deal with thesesituations.  

If a salvor insists on an immediate agreement, we recommend that you only use the Lloyd’s Open Form (LOF). This open form of contract can be used internationally and can even be agreed verbally. The LOF works on the basis of “no cure – no pay” and contains an arbitration agreement, which offers greater legal security should subsequent disputes arise.


Jens Ploch




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