Builders Risk Hull Insurance

Builders Risk Hull Insurance is a protection policy pertaining to when a ship is in the builders' hands. Coverage can be all-inclusive, excluding defects and destruction through war. It protects against both pre- and post-launch disasters. Builders can choose a policy which covers the total amount of the finished product (Completed Form), or a policy which is adjusted upwards as work is completed (Reporting Form).

The hull of a boat is the basic body of the vessel, including any vital appendages. The scope of this insurance coverage extends beyond simply basic damage to the hull, covering some business risk as well. Business Risk Hull Insurance can also be purchased when a ship is in for repairs or during transport of the vessel to and from the owner.

Hull insurance coverage has expanded rapidly with the introduction of ever more complicated and expensive ships. Builder’s risk construction projects include everything from simple, low-technology vessels such as a deck or hopper barges to large, highly complex ships. "As the size and complexity of a project grows, the inherent risk exposure generally increases as well. Factors contributing to this increased risk include: project duration and cost, use of modular construction, installation of specialized machinery, advanced control and monitoring systems, and a higher component of flammable furnishings or fixtures (referred to as the “fire load”)," according to the Builder’s Risk Subcommittee of The American Institute of Marine Underwriters.

The biggest risk during construction is fire. A welder's torch can set off a blaze that can destroy a ship under construction, which at many stages of the job do not contain working fire-suppression systems. Vessel types most prone to fire loss during construction/refit are mega yachts, cruise and passengers vessels, and vessels constructed entirely of wood or fiberglass, AIMU reports.

Launching is another activity where there's high risk of damage, no matter what method is used. Then there's the risk of sea trials, where many of the systems are being operated for the first time under real-world conditions.

The five limits provided under the American Institute Builder’s Risk coverage form are as follows: 1. Total Loss of the vessel; failure to launch; sue and labor (This clause covers expenses borne by the insured to avert or minimize a loss that would otherwise be covered by the policy.); collision liability; and protection & indemnity, which protects the insured from claims resulting from loss of life or bodily injury of persons (other than employees of the insured) while the vessel is still being constructed on land or in a dry dock or graving dock.