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Builders’ risk cover protects the ship builder from loss of or damage to the hull and machinery of a vessel during construction or conversion. Builders’ risk cover is designed to meet the specific insurance needs of vessels during construction. Insurance will, in the majority of cases, apply from the time construction/conversion begins and continue through to launching, sea trials, and delivery to owners. Most builders’ risk underwriters prefer to give cover for all vessels being built by an insured at a given yard during an annual period rather than grant cover for a single contract.
The policy will cover against loss of or damage to the vessel during construction or conversion, from the laying of the keel and sea trials to delivery of the completed vessel. Cover is usually based on the internationally recognised Institute Clauses for Builders’ Risks 1/6/88 and can be extended to incorporate the entire building process as the construction process evolves, including cover for engines and equipment that are waiting to be installed. Builders' risks insurance also includes protection against certain liabilities arising out of vessel ownership.