I understand that they are cutting out all the burned and unusable steel... but most importantly, Sapphire princess will miracurously become Diamond princess, and the burned skeleton of Diamond will become Sapphire Princess after some rebuilding.
That's right. The yard is accelerating work on the second hull, so there will be no further delays and no further cancellations (we hope).
Of course, the ship also technically is not named until it is christened so the exchange of names is no big deal.
All these financial losses are covered by insurance of the yard, as the ship does not legally belong to the cruise line until it is completed and fully commissioned!
That's true, but the shipyard enters default on the contract if it fails to deliver the vessel on time. The cruise line also suffers lost revenue due to the delay in delivery, for which the shipyard becomes liable due to the default. Of course, this also is covered by the shipyard's insurance.