Builder’s Risk Hull Insurance in the UAE

Builder’s Risk Hull Insurance is intended for vessels under construction, conversion or major rebuilding. It may cover eligible sudden and accidental physical loss or damage during the insured construction period, subject to the issued marine policy wording, limits, deductibles, conditions and exclusions.

The policy may be arranged for shipbuilders, vessel owners, contractors, financiers or other parties with an insurable interest in the project. The insured vessel, construction contract, yard, project value, building schedule and responsibilities of each insured party should be accurately declared and accepted by the insurer.

What Builder’s Risk Hull Insurance May Cover

Depending on the issued policy, material-damage cover may apply to:

1. Vessel under construction: The hull, machinery and equipment intended to form part of the insured vessel.
2. Construction materials: Declared materials and components allocated to the vessel-building project.
3. Assembly and installation: Eligible damage during fabrication, assembly, fitting-out and installation work.
4. Launching: Eligible physical damage during an approved launch, when this stage falls within the insured period and policy conditions.
5. Testing and trial trips: Eligible damage during declared testing, commissioning and approved sea trials.

Fire, theft, malicious damage, storm, flood, collision or other events are not automatically covered merely because the policy is described as builder’s risk insurance. The cause of loss must fall within the issued wording and must not be excluded.

Trial-Trip and Liability Cover

Collision liability and specified Protection and Indemnity exposures during trial trips may be considered when expressly included. These liability sections are separate from physical-damage cover and remain subject to their own limits, deductibles, territorial scope and exclusions.

Liability for crew injury, pollution, damage to third-party property, wreck removal or other marine liabilities should not be assumed to be covered unless stated in the policy schedule or an applicable endorsement.

Who May Need This Insurance?

Builder’s Risk Hull Insurance may be relevant to:

1. Commercial shipyards and vessel builders.
2. Owners commissioning a new vessel.
3. Businesses undertaking vessel conversion or major rebuilding.
4. Marine engineering and specialist installation contractors.
5. Lenders or financiers with an insurable interest in the vessel.
6. Parties required to arrange insurance under a shipbuilding contract.

Important Policy Conditions

1. Construction period: Cover normally applies only during the dates stated in the policy. Project extensions should be requested before expiry.
2. Project value: The insured value should reflect the declared construction contract and the valuation basis required by the policy.
3. Project milestones: Keel laying, machinery installation, launching, testing and delivery dates should be disclosed where requested.
4. Yard and locations: The construction yard and any other fabrication, storage or testing locations should be declared.
5. Design and specifications: The vessel type, dimensions, materials, machinery, classification and intended use should be accurately stated.
6. Material changes: Changes to the design, value, schedule, construction method, ownership or trial arrangements should be disclosed.

Optional Extensions

Subject to underwriting acceptance, extensions may be considered for delivery voyages, movement between declared yards, temporary storage, debris or wreck removal, escalation in project value, increased value or specified third-party liabilities.

Delivery trips and transit from the construction yard to the vessel’s final destination are not automatically included. The route, distance, crew, towing arrangements and navigation conditions may require separate assessment.

Common Exclusions and Limitations

The policy may exclude or restrict:

1. Wear and deterioration: Corrosion, gradual deterioration, ordinary wear and lack of maintenance.
2. Defective work or components: The cost of correcting faulty design, defective materials or defective workmanship may be excluded.
3. Consequential loss: Delay, loss of income, penalties, loss of use or increased project costs unless expressly insured.
4. Existing defects: Defects or damage known before the policy began.
5. Yard property: Damage to the shipyard’s buildings, tools, cranes or equipment unless separately insured.
6. Excluded events: War, nuclear risks, deliberate acts and other exclusions stated in the policy.

Depending on the defective-parts clause, the defective component itself may be excluded while resulting accidental damage to other insured parts may be treated differently. The issued wording should therefore be reviewed carefully.

What to Do After an Incident

1. Protect people and take reasonable steps to prevent further damage.
2. Notify Al Buhaira Insurance as soon as reasonably possible.
3. Preserve damaged components and relevant evidence.
4. Keep photographs, incident reports and construction records.
5. Retain contracts, invoices, drawings and repair estimates.
6. Do not authorise major repairs or disposal without prior agreement, except for urgent safety measures.

How to Request a Quotation

Shipbuilders and vessel owners can submit initial project information through Al Buhaira Insurance’s dedicated Builder’s Risk Hull quotation page. The assessment may consider the vessel type, project value, construction period, yard, design, machinery, launch method, trial-trip arrangements and previous claims.

A quotation does not confirm that insurance has started. Cover begins only after the required information has been reviewed, the offered terms have been accepted and the applicable policy documents have been issued.

Documents Required

The insurer may request documents and information such as:

1. Completed proposal or quotation form
2. Trade licence and company details
3. Shipbuilding or construction contract
4. Vessel description and technical specifications
5. Construction value and cost breakdown
6. Construction programme and project milestones
7. Shipyard and construction-location details
8. Plans, drawings and classification details
9. Machinery and equipment schedule
10. Launching method and risk information
11. Testing and trial-trip arrangements
12. Delivery-voyage details, when required
13. Contractor and subcontractor information
14. Previous insurance details and claims history
15. Owner or lender insurance requirements

Why Choose Al Buhaira Insurance?

1. Marine insurance range: Builder’s Risk Hull Insurance is available within Al Buhaira Insurance’s marine products.
2. Dedicated quotation page: Shipbuilders and vessel owners can submit initial project details online.
3. Project-based assessment: Quotations can consider the vessel, construction value, yard, project period and requested extensions.
4. Flexible limit structure: Limits may be considered on a per-vessel or per-yard basis, depending on the agreed terms.
5. Policy and claims enquiries: Customers can contact Al Buhaira Insurance regarding issued terms or an incident under an existing policy.

Frequently Asked Questions