Three years on from the Baltic Sea storm surge: Are sailors better insured today?

Three years after the the devastating Baltic Sea storm surge of October 2023 This raises the question of what lessons insurers and yacht owners have learnt from the disaster. The damage ran into the millions; hundreds of yachts had to be repaired, and numerous wrecks had to be salvaged at great expense. Has the incident made owners more cautious? According to the yacht insurance broker Pantaenius, awareness of personal responsibility has grown. Nevertheless, the company still sees significant shortcomings in the way yachts are secured. For owners, there is also the question of whether their insurance actually covers all financial risks in the event of an emergency.

What the 2023 claims figures reveal

The extent of the damage caused by the storm surge from 20 to 21 October 2023 is illustrated by the Pantaenius’s balance sheet at that time. By early February 2024, the company had recorded 430 claims, with 73 vessels classified as total losses. The total cost of claims recorded at that time amounted to 9.2 million euros. At the time, insurance experts estimated that between 1,300 and 1,700 yachts had been affected by the storm surge. According to the estimate at the time, up to 300 yachts may have suffered a total loss.

For some insurers, the event placed an enormous financial burden on them. Looking back, Dirk Ammann of Pantaenius speaks of loss ratios in the upper three-digit percentage range. The claims ratio refers to the ratio of claims expenditure to earned insurance premiums. A ratio of, for example, 800 per cent means that for every euro of premium income, there are eight euros of claims expenditure. Nevertheless, the storm surge did not trigger any fundamental change in insurance practice. “However, there has been no resulting change in underwriting behaviour or in the scope of cover,” explains Ammann.

In his view, one of the reasons for this is that it is virtually impossible to reliably determine the probability of a recurrence. Furthermore, many risk-bearers spread their business across different areas of insurance. The exceptionally high level of claims in the water sports sector therefore did not necessarily affect their entire economic base. Unlike some specialist brokers, Ammann states that the actual risk-bearers have not run into financial difficulties.

Organising salvage operations more effectively

The situation is different when it comes to organisational preparations for such events. According to Pantaenius, the company has, above all, raised awareness of how important it is to be able to organise assistance at short notice in the event of an emergency. As soon as an extreme weather event looms, the company coordinates with specialist partners, including MCS Marine Claims Service. This involves assessing available salvage capacity, the necessary technology and possible operational scenarios.

According to Ammann, MCS staff carried out more than 180 salvage operations during the storm surge of 2023. One of the greatest difficulties at the time was that, in numerous harbours, sunken, stranded or severely damaged vessels had to be salvaged simultaneously. In some cases, jetties had been destroyed, crane sites were inaccessible and yachts were trapped under rubble. Divers, floating cranes and specialist contractors were deployed for weeks on end. The experience heightened awareness of just how crucial an efficient organisation is in the event of damage.

More responsibility, but also a lack of experience

But how have the owners themselves changed? Ammann certainly sees progress. According to Pantaenius, boat owners are now more willing to fulfil their responsibilities than they were a few years ago. The storm surge has contributed to this. As early as the first anniversary, *YACHT* magazine had highlighted, in connection with an interview with Pantaenius, a rise in demand for yacht insurance since the storm surge.

The insurance broker is now also seeking to warn its customers more specifically about extreme weather. In collaboration with the weather service provider Wetterwelt, Pantaenius states that it offers a free SMS weather warning service for the North Sea and the Baltic Sea. This service can be activated in the customer portal and sends a warning tailored to the customer’s specific mooring location if severe weather is forecast within the next 48 hours. According to Ammann, the service has been well received.

However, a weather warning is no substitute for preparing the vessel or organising local assistance. Ammann observes that some boat owners still rely too heavily on the harbour master. However, particularly in extreme weather conditions, the harbour master’s ability to intervene is limited. It is neither his responsibility nor practically possible to check or adjust all the fenders and mooring lines of the boats in the harbour.

Ammann is particularly critical of the condition of some yachts in the harbour: “Many boats are used at the weekend and then left without being properly prepared or secured.” In his view, this is not necessarily down to indifference. “It is probably more a lack of experience than a lack of willingness.”

This assessment is consistent with the experience gained during the storm surge of 2023. At that time, numerous yachts were adequately secured for normal harbour conditions, but not securely enough for extreme high water levels. Mooring lines slipped over the tops of the dolphins, lines were too short, or boats were pushed against jetties and neighbouring vessels by heavy waves. The consequences were not only damaged vessels, but also considerable costs for salvage, repair and disposal.

Why third-party liability alone is not enough

From an insurance perspective, there is an important distinction to be made here: boat third-party liability insurance generally protects the owner against valid claims for damages by third parties for which he is legally liable. In Germany, whilst there is generally no statutory obligation to take out boat liability insurance for privately used sailing yachts, many marina and winter storage operators do require proof of such cover. However, liability insurance does not cover damage to the owner’s own vessel. To do this, the owner needs comprehensive insurance.

Particularly in the event of a storm surge, your own hull insurance can be crucial. If a neighbouring yacht breaks free and damages your own vessel, its owner is not automatically liable for the damage. Unlike in road traffic, the general principle in water sports is that The principle of fault-based liability. Liability therefore generally requires that culpable misconduct on the part of the person responsible can be proven. If they have secured their boat properly and it is nevertheless torn loose by an exceptional storm, there may be no such culpability. In such cases, the neighbour’s third-party liability insurance is not obliged to cover the damage. Without their own comprehensive insurance, the injured party may be left to bear the costs themselves.

Even if it can be proven that the person responsible is liable, settling the claim is not always straightforward. The person responsible may not have adequate third-party liability insurance or may be unable to pay the claim. Even in such cases, your own comprehensive motor insurance can be crucial. In the event of an insured claim, it will initially handle the settlement and, if necessary, subsequently pursue claims against the party responsible. Furthermore, there may be differences in the compensation offered. Whilst the other party’s third-party liability insurance may, under certain circumstances, only be required to cover the current market value of damaged parts, a good comprehensive insurance policy can cover repairs without applying any age-related deductions. However, you should bear in mind any agreed excesses and the possible impact on no-claims discounts.

Comprehensive cover: Partial damage or total write-off only?

Depending on the terms of the policy, comprehensive insurance covers damage to your own vessel, for example as a result of storms, sinking, collisions or other insured risks. With so-called ‘all-risks’ cover, all risks are generally included unless they have been expressly excluded. It is nevertheless essential to check the terms and conditions of the insurance policy. Not every policy offers the same level of cover. In the case of policies that only cover explicitly named risks, for example, it is necessary to check whether storm surges and flooding are actually included amongst the insured events.

It is equally important to distinguish between comprehensive hull insurance and pure total loss insurance. The latter generally only pays out once the contractually defined total loss has occurred. If a yacht is severely damaged in a storm surge but can still be repaired economically, owners with such a policy may be left to foot the repair costs themselves. Comprehensive hull insurance, on the other hand, can also cover partial damage. Whether repairs are settled without any deduction for older equipment that has now been replaced with new parts depends, in turn, on the terms and conditions.

Older yachts can incur high repair costs

This is particularly important for owners of older yachts. Because a relatively inexpensive second-hand boat, too can result in high repair costs. A new mast, extensive fibreglass work or the repair of a flooded yacht do not cost significantly less simply because the vessel is already several decades old. As explained in our comprehensive insurance guide, even limited damage to older boats can therefore lead to an economic total loss – particularly if the value of the vessel is significantly lower than the cost of a professional repair.

However, this does not mean that older boats can no longer generally be covered by comprehensive insurance. The decisive factors are their condition, their value and the balance between the insurance premium and potential repair costs. For well-maintained classic boats or older yachts that have undergone extensive refurbishment, comprehensive cover may still be worthwhile. For other boats, total loss or current market value insurance may be an option. With total loss cover, partial damage remains uninsured up to the agreed limit, whilst with current market value insurance, deductions for age and wear and tear may reduce the compensation paid. Owners of smaller and older yachts, in particular, should therefore assess what financial risk they can bear themselves and what level of cover they actually require.

Salvage costs may exceed the value of the boat

A particularly important consideration is the cost of salvage and wreck removal. The storm surge of 2023 demonstrated that these costs can be substantial, even for comparatively small or older yachts. If a boat sinks in the harbour, it may need to be raised using specialist equipment, removed and disposed of. An official salvage order can also put the owner under time pressure. Yet the cost of salvaging a vessel can far exceed the boat’s remaining value.

A good comprehensive insurance policy should therefore explicitly include salvage, wreck removal and disposal. In particular, it is important to check whether these costs are covered in addition to the actual sum insured or whether they are deducted from it. Furthermore, there may be maximum limits or restrictions, for example if the salvage is required not by a public authority but by the port operator. The cover for any costs arising from the remediation of environmental damage should also be clarified.

An interesting special case arose immediately after the storm surge of 2023 in Kiel. The port authority ordered at the time…that damaged and sunken vessels had to be salvaged at short notice by specialist firms. Benyamin H. K. Tanis, a solicitor specialising in water sports law, pointed out to *YACHT* at the time that such an order could also be relevant for owners with only third-party liability insurance. Under certain circumstances, public-law obligations or claims arising from environmental damage may be covered by a boat’s third-party liability insurance. A salvage operation enforced by the authorities could then be covered, at least in part, by the relevant policy.

However, owners cannot rely on this. Whether liability insurance actually covers such a case depends on the agreed terms and the specific legal requirements. An official salvage order alone does not guarantee that costs will be covered. Anyone who is covered solely by third-party liability insurance should therefore pay particular attention to which public-law claims and environmental damage are covered by their policy. More comprehensive cover for salvage and wreck removal costs remains a key argument in favour of taking out suitable comprehensive insurance.

The terms Towing assistance and recovery are often confused. A simple towing operation for a yacht that is unable to manoeuvre but is not in immediate danger is treated differently under insurance law from the rescue of a vessel from a dangerous situation. A salvage operation may give rise to substantial claims for salvage remuneration. The amount of these fees depends, amongst other things, on the value of the salvaged property, the effort involved, the risks and the resources deployed. Owners should therefore check with their insurer to clarify which costs for towing assistance and salvage are covered in each case and how they should proceed when engaging external assistance.

Fixed fee, equipment and personal belongings

Another question concerns the sum insured itself. Many yacht hull insurance policies operate on the basis of a the so-called fixed rate, under which a sum of compensation is agreed in the event of a total loss. However, this depends on the specific terms of the contract. Not every agreement described as a ‘fixed sum’ guarantees the same level of compensation in the long term. Some terms and conditions include time limits or restrictions, after which only the current market value may be taken into account.

Owners should therefore check whether the agreed sum insured still reflects the value of their yacht and would be sufficient to replace it with a comparable vessel. Equipment fitted at a later date, costly modifications or an extensive refit may also make it advisable to adjust the sum insured. It should also be clarified whether the dinghy, trailer, storage cradle, navigation equipment and other accessories are covered by the insurance or must be expressly included in the sum insured.

Last but not least, personal belongings on board can have a significant financial impact. High-quality sailing clothing, computers, cameras and other personal items are not necessarily covered under the insured vessel’s equipment. Insurance policies often distinguish between equipment, accessories, inventory and so-called personal effects. Separate compensation limits may apply to these items. Anyone who regularly keeps valuable items on board should therefore also check their insurance cover. Following a storm surge in which a yacht has been completely submerged, additional losses may otherwise arise that are not fully covered by the agreed policy.

Gross negligence: It all depends on the terms and conditions

Another question concerns the owners’ duties of care. Immediately after the storm surge of 2023, several major boat insurance brokers told *YACHT* that it intended to settle the claims under its comprehensive insurance policies. In view of the exceptional nature of the natural disaster, Pantaenius initially saw no reason to accuse the owners of being inadequately prepared. Hamburg-based yacht insurer Schomacker and Firmenich Yachtversicherungen also indicated that they intended to cover the insured damage in accordance with the terms of the policy.

However, this does not mean that owners can generally rely on such regulatory practice. Anyone who ignores a specific weather warning, secures their vessel in a clearly inadequate manner, or fails to take necessary precautionary measures risks being accused of gross negligence, depending on the circumstances. Whether an insurer is therefore entitled to reduce its cover depends on the individual case and the relevant terms of the policy. The burden of proof also depends on the legal basis. In the event of a breach of contractual obligations, for example, the policyholder may have to prove that there was no gross negligence.

Another crucial factor here is whether, and to what extent, the insurer waives the defence of gross negligence. Such clauses may be limited to specific levels of loss or contain exceptions. Owners should therefore not rely solely on the fact that a product description advertises such a waiver, but should read the actual terms and conditions of the insurance policy.

The harbour master does not replace your own precautions

Anyone who leaves their boat moored in the harbour unattended for an extended period remains responsible for ensuring that it is adequately secured. This applies not only in the event of a forecast ‘once-in-a-century’ flood. Even ordinary autumn storms can roll up inadequately secured roller sails, tear tarpaulins, dislodge fenders and place heavy strain on mooring lines. When water levels are high, it is also essential that mooring lines allow sufficient upward movement without losing their holding capacity.

Webinar tip: You can find further practical information on line handling, fenders, shock absorbers and abrasion protection in the Webinar on safe mooring, which further enhances the security of various berths.

As a general rule, the harbour master is no substitute for one’s own precautions. As Heyko Wychodil, a solicitor specialising in water sports law, has explained, the courts generally assume that owners bear a high degree of personal responsibility. The mooring contract normally covers the provision of the berth and the harbour infrastructure, but not comprehensive supervision of the individual vessel. However, additional duties of supervision or monitoring may arise from expressly agreed services. Anyone who is unable to respond at short notice due to a long journey should therefore organise a reliable representative in good time.

Proper preparation involves not only suitable mooring lines and fenders, but also securing roller sails, tarpaulins and loose equipment. If extreme weather is forecast, it is essential to check well in advance whether the mooring is still suitable or whether the yacht can be moved to a safer location or brought ashore in good time. Such decisions must not be postponed until the jetties are flooded and it becomes dangerous to set foot on them.

Additional insurance issues arise when a vessel remains in the water during autumn or winter. Not every policy covers all risks whilst the vessel is moored in the water over winter. Damage caused by ice break-up, frost or a lack of maintenance may be excluded under the terms and conditions. It is also crucial to determine whether consequential damage remains insured – for example, if a cause that was initially excluded ultimately leads to the vessel sinking. Owners should therefore clarify explicitly before winter begins whether insurance cover applies even during prolonged periods moored in the water, and what specific precautionary measures are required.

Coordinate at an early stage in the event of a claim

If damage does occur, then a swift and coordinated response Important. Policyholders should first ensure that there is no danger to people and, where it is safe to do so, minimise further damage. They should then document the damage with photographs and inform the insurer without delay. It is important to ensure that the claim actually reaches the relevant insurer. Anyone who has taken out insurance through a broker or intermediary should check whether the broker or intermediary is expressly authorised to receive and process claims. If in doubt, it is advisable to report the claim directly to the insurer.

Major repairs or complex recovery operations should not be commissioned without prior consultation, provided that the situation allows for such consultation. However, where there is an imminent risk of further damage or where official orders are issued, necessary measures must be taken. Damaged equipment should, where possible, be retained as evidence. Invoices, cost estimates, expert reports and correspondence with port authorities or salvage companies may also be important for the settlement of the claim.

Experience from 2023 also shows that, in the event of a disaster, the practical capacity of the insurance company plays a major role. When hundreds of boats are damaged in a region at the same time, it is not simply a matter of the contractual commitment to pay out on a claim. It is equally about having accessible points of contact, available loss adjusters, suitable salvage companies and the organisation of the swiftest possible claims settlement.

Three years after the storm surge, the overall picture is therefore mixed. According to Pantaenius, the insurance industry has not fundamentally altered its cover, but has, in some respects, further developed its organisational preparedness for extreme weather. Ammann recognises a growing sense of responsibility amongst shipowners, but at the same time still sees room for improvement when it comes to the practical safeguarding of vessels.

This has an important implication for boat owners: you shouldn’t wait for the next storm warning before reviewing your yacht insurance. It is crucial to have suitable third-party liability cover, comprehensive cover commensurate with the boat’s value, adequate cover for salvage and wreck removal, as well as clear provisions regarding excesses, consequential damage and duties of care. And even a good insurance policy cannot replace what needs to be done before the storm strikes: carefully preparing your own vessel and securing it in good time.

Seven questions to ask when checking your insurance cover ahead of the autumn storms

• Are storm surges and flooding covered by the agreed comprehensive cover, and what exclusions apply?
• Are partial claims also paid out, and are there any deductions for age or wear and tear?
• Are salvage, wreck removal and disposal covered in addition to the sum insured, and what are the maximum limits?
• Is the sum insured sufficient to replace a comparable yacht, and to what extent is the fixed valuation binding?
• What are the restrictions on accessories and personal belongings on board?
• What excesses, duties of care and provisions regarding gross negligence have been agreed?
• Does the cover also apply to winter storage in the water, including any consequential damage as agreed in each case?

Have you made any changes to your insurance cover since the 2023 Baltic Sea storm surge, and which policy details were the deciding factors in this?