EFU Insurance Logo

Construction Risks

During the period of the construction of a vessel, it may be insured with an insurance company familiar with handling of such insurance. Due to the fact that a Ship-owner's Yard is essentially a static, non-marine risk, it is possible that basically non-marine insurer will take on the risk of covering a vessel while it is under construction, but generally it is unsatisfactory. Cover will be required for a whole period of construction, which may last for two or three years and as the builder frequently accepts responsibility for the launching of the vessel, its tests, sea-trials and possibly its delivery voyage, builder's risks policies issued in the marine market include full marine cover accordingly. The Institute Clause for Builders' Risks provides a comprehensive form of cover in this respect. Cover can be extended to include War risks but due to the operation of the "Waterborne Agreement"; the vessel is only insured while she is waterborne i.e. after launching.

Period of Insurance

The customary practice is to effect Hull policies for a period of 12 months. The clauses contain, however, the "Continuation Clause" which provides that if at the expiration of the policy the vessel is at sea, or in distress, or at a port of refuge or of Call, the vessel shall, provided previous notice is given to the underwriters, be held covered at a pro-rata monthly premium to her port of destination. This clause provides protection for an insured in the event that vessel was known to be in a damaged condition at sea or feared lost and the policy was nearing termination, naturally making it difficult to obtain renewal of the policy. These days most renewals are arranged well ahead (negotiations frequently commencing two months before expiry) and the need for this clause has, therefore, been reduced.

Types of Hull Cover

  1. Institute Time Clauses — Hulls: total loss, general average and ¾ collision liability (including salvage, salvage charges and sue and labour)
  2. Institute Time Clauses — Hulls: total loss only (including salvage, salvage charges and sue and labour)
  3. Institute Time Clauses — Hulls: port risks and institute time clauses and hulls: port risks including limited navigation
  4. Institute Voyage Clauses — Hulls

Additional Insurance

  • Institute War and Strike Clauses — Hulls — Time
  • Institute Time Clauses — Hulls: disbursements and increased value (total loss only, including excess liabilities)
  • Protection and Indemnity Associations
  • Liabilities in respect of Seamen
  • Liabilities in respect of Passengers
  • Liabilities in respect of Third Parties
  • Liabilities arising from Collisions
  • Liabilities arising from Pollution
  • Liabilities arising from Wreck Removal
  • General Averag

Miscellaneous Marine Risks

There are quite a number of other marine risks, such as Ship Repairers' Legal Liability and Ship Owners' Liabilities (usually to "on deck" shipments covered by "under deck" bill of lading), Terminal Operators Liability Insurance and Stevedores Liability Insurance. These represent small but important areas within the specialized field of Marine Insurance.