Cover Across the Four Construction Phases
A Shipbuilders' Risks policy follows the vessel through its entire construction lifecycle. Risks and insurable values change at each phase — the policy must reflect this progression.
Construction Commencement to Launch
Physical damage to the hull structure under construction — fire, storm, structural failure, theft of equipment and materials. Note: modern Shipbuilders' Risks policies typically attach from "first steel cutting" (the actual start of fabrication), not the ceremonial keel laying. The policy inception must be confirmed against the shipbuilding contract milestone.
Launching
One of the highest-risk moments in the construction lifecycle — slipway or floating dock failures, structural asymmetry, flooding.
Sea Trials
Marine perils during sea trials — grounding, collision, machinery damage, crew and guest liability. Sea trials cover is subject to the specific policy conditions — typically the yard must give prior notice to underwriters, and the trials must be conducted under the supervision of a competent crew.
Third-Party Liability
Liability to third parties for property damage or injury arising from construction operations — sub-contractor, neighbouring vessel and dock infrastructure exposure.
Who Bears the Risk — Yard or Owner?
Shipbuilding contracts (typically based on SAJ or AWES standard forms) allocate risk between the yard and the owner at different stages. The insurance programme must align with the contractual allocation — misalignment creates gaps that are not apparent until a claim occurs.
- Under most standard contracts, risk passes to the shipowner on delivery and acceptance
- Before delivery, the yard typically bears insurable interest and must insure the vessel under construction
- The owner's advance payments may need separate coverage — the yard's insolvency or total loss can destroy unrecovered instalments
- Some contracts allow the owner to co-insure on the yard's policy — this should be verified and endorsed