This is sad indeed, sorry to hear about this. I think that you may have more luck getting your own insurance company on your side and pushing the case for totalling the boat. After all, if the boat is fixed, your insurance company is the one that defines what condition everything must be in to continue insuring it.
Yes; first I must say that I am sorry for your loss. I could not imagine going to the yard and finding out they had let my boat sink and had not bothered to walk through it and check for water rushing in or that the bilge pump was operable.
I'd say that first you need to contact YOUR insurance company; tell them the situation and get them working for you. Tell them you are NOT making a claim against your policy but you would like them to work with the yard's insurance and that you would like legal representation to be provided if such service is available as a part of your policy.
I would not contact or sign on to a lawyer unless you cannot reach an agreement with the yard on replacement value or repairs that would fix everything. As for loss of hull value I can't say for sure but I'd guess that you are probably looking at ~50% value of the boat for a boat that was submerged.
You also need to contact your mortgage provider if the boat is not fully paid for, but check your paperwork because in the event of a loss like this your mortgage might require payment in full for the principal immediately. I don't know how you handle this but if you need to pay off the loan you will either get stuck in default or you will need to be paid for the total loss so you can pay off the mortgage.
The boat can be gone through and repaired; the question is what is the total cost for repairs? If the engine was submerged I would be pushing for a new engine. I would have your mortgage provider hire their own surveyor to check the boat if it is mortgaged since they stand to lose also. I would also look for a surveyor who specializes in sunken or wrecked sailboats so he can determine if the boat is a total loss or what it would cost to repair.
If you take a settlement for the total loss; and you consider yourself good at DIY work you might consider buy-back of the totaled boat. Replacement of all electrical systems that were submerged would be required; possible engine issues down the road, but the rest is clean-up and minor repair work. If you had a 100k loan and it was paid for and you put ~20-25k in repairs back into it you would now own a 50k (resale) boat for 25k invested and be out from under the mortgage.