Luxury cars lost on ship that caught fire present an insurance dilemma

It’s every car lover’s nightmare: the special Bentley or Lamborghini you ordered half a year ago, or more, is finally on a cargo ship headed for its destination. Then the ship catches fire.

The nightmare came true on February 16 when a ship sailing from Germany to Rhode Island caught fire near the Azores islands with more than $400 million worth of cars on board, including luxury models from Bentley, porsche and Lamborghini. A daring rescue by the Portuguese Air Force and Navy saved all 22 crew members, with no injuries reported.

As of February 22, the Felicity Ace it was still on fire; what remains of some 4,000 Volkswagen AG vehicles will be assessed once a salvage team can carry out a proper inspection of the ship. A website has been created to provide updates on the incident.

Those who ordered vehicles that went on board the Felicity Ace really only have one question: What should I do?

Things that happen

It is not such an unusual phenomenon for a cargo ship to sink with cars on board. Since 2003, there have been at least eight major incidents involving large boats and car damage. In 2019, the Brazil-bound Grande America sank with 37 Porsches on board, including four rare and highly customized 911 GT2 RSs (current average price: $366,487, with specialized ones approaching $800,000).

That same year, a ship called the Golden Ray left the port of Brunswick, Georgia, before capsizing with more than 4,000 Middle East-bound vehicles, including trucks and SUVs from General Motors and Mercedes-Benz.

Former merchant mariner Sal Mercogliano said that in the case of the Felicity Ace, all the vehicles would likely break down because it would be difficult for firefighters to get into the tight cargo decks to fight the flames.

No cause of the fire has been confirmed.

Go ahead or cut losses?

So what is the recourse for customers who have been waiting for these cars? Technically, vehicles do not belong to customers until delivery. They are still owned by the automaker, so personal auto insurance is not run. Commercial insurance policies for car manufacturers and freight companies would cover their losses. Volkswagen Group maintains supplier relationships for car shipments, not for each individual VW brand, a spokesman said.

These poor souls with vehicles lost at sea have two general options. Whether it’s reshipping the vehicle order, keeping the deposit still, and waiting months for a new shipment; or cut your losses, emotionally and financially, take the disaster as a sign of some kind and order something else entirely.

“The dealer promised to keep me informed of any updates on how Porsche decides to resolve this.” customer Matt Farah tweeted about the custom Porsche Boxster Spyder he had ordered in August 2021 that was in the Felicity Ace. “The odds are to make it again and hopefully not have to wait another eight months.”

Good customer service

In the case of luxury vehicles, it is up to automakers like Bentley, Porsche and Lamborghini to do whatever they can to reassure their high-net-worth customers. Manufacturers don’t want those $300,000 orders going elsewhere; those who spend that much money on an exceptional vehicle are often brand loyalists for life, or aspire to be.

“We are already working to replace all cars affected by this incidentPorsche spokesman Marcus Kabel said in an email. “Cars will be as close as possible to their original ordered specification”. In total, the fire is expected to represent a total loss of US$155 million for the affected brands.

A Lamborghini spokesman declined to comment on how the Italian brand would handle the losses. A Bentley representative confirmed that 189 Bentley vehicles are on board the ship and that customer cars will be given priority for replacement. Both manufacturers face a potentially larger loss than Porsche, proportionally speaking, as they make far fewer vehicles and are far more expensive.

For Farah, the best decision in this case was to reorder his same spec. “[Porsche] gave me the opportunity to make changes to the build and I said, ‘Make it like I originally asked‘” he commented. Farah could not confirm how long it would take to rebuild it, but he said Porsche assured him it was “priority”. Meanwhile, he will drive something else.