1. Marine Builders’ Risks – 08.11.13
Knut M. Finckenhagen
Vice President, Gard AS
The Nordic Association of Marine Insurers

2. ... then you look out the window to see what the weather is like ...
Imaging waking up in the morning, putting on your slippers and walking out in the kitchen to put on the kettle ...
... then you look out the window to see what the weather is like ...
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4. Today’s topics A brief look at the international shipbuilding market
The need for buying Builders’ risks insurance
Builders’ risks insurance
Cover
NMIP, Chapter 19
Case study – Westland Shipyard vs. SMIL
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5. A brief look at the shipbuilding market
Buzz group dialogue + flip over 5

6. Asia on the move

7. Global orderbook by cgt – 2013 (Sept. 2013)
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8. World shipbuilding supply & demand
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9. The need for buying Builders Risks insurance
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10. Builders’ Risks Insurance
Builders’ risks insurance which covers newbuildings,
from “keel laying” to delivery, including sea trials.
Insurance coverage of conversions and rebuilding
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11. Wordings Standard wordings on “all risk” basis
ICBR 1/6/88 - Institute Clauses for Builders’ Risks
The Nordic Marine Insurance Plan of 2013, Ch. 19
Local wordings:
Dutch Bourse Policy for Construction Risks 1947 (1995)
German Marine Insurance Conditions for Shipbuilding Risks 1998 (amended 2004)
American Institute Builder’s Risk Clauses
Marcar 1/9/07 – “New” English builders risks clauses

12. We have a Plan!! Providing cover……….

13. Place of insurance (19 – 5) In the builder’s yard Other premises?
What about transports?
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14. What is included in the coverage (19 – 9)
The ”subject matter insured” itself
The cost of planning and drawings
Components, equipment and materials delivered and while at the yard’s premises
Buyers equipment/material delivered and while at the yard’s premises (OFE)
Bunkers and lubricating oil on board (sea trials)
Bunkers Blue Card (BBC)
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15. Insurable value (19 – 10) FCV – Final Contract Value Construction work
Additional work (changes)
Owner Furnished Equipment (OFE)
Yard profit
§ 19-10
Forsikringsverdi
FCV – Final Contract Value
Byggesum
Tillegg/endringsarbeider
Bestillers leveranser – OFE
Subsidier/tilskudd
Verkstedets fortjeneste, men ikke bestillers
Ikke markedsverdi – kun reelle byggekostnader
Hvis bygget ikke er ferdig er verdien som over minus
ikke utført arbeid
Ikke levert utstyr, deler og lignende
Fradrag subsidier
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16. Insurance period (19 – 2) When does the insurance really starts?
Keel laying
Signing of the contract
‘First cutting of steel’
Value exposure at the yard
Start of engineering work
At launching
§19-2
Løper fra tidspunkt som angitt i polisen
Nevn koreanske forhold – fra launching
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17. Insurance period (19 – 2) cont.
When does the insurance stops?
Time of delivery as per the Shipbuilding Contract
Delivery to buyer at a specific agreed location
What about extensions?
Automatic extension at additional premium
Hva gjøres ved evige forlengelser
Forandring av risiko
Brann
Egenandel
Setter sikrede i en knipe ved å ”nekte” forlengelser – særlig ved tidligere skade på bygget
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18. The cover – Nordic Plan Perils covered (all risk basis)
Physical loss & damage ( )-(ch. 12)
Faulty design (19 – 15)
Launching (19 – 18)
Removal of wreck (19 – 19)
Collision liability (19 – 20)
Protection & Indemnity (19 – 20)
Total loss (19 – 11)
Sea trials (19 – 5)
Escalation (19 – 7)
Towage (19 – 27)
War risk (19 – 30)
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19. Additional premium creators
Value increase/decrease Period extensions/early delivery Tows Delay insurance Guarantee periods Delivery voyages War insurance (from waterborne)

20. Let us hope the insurance will be a success!!!!
Launching at Niestern Sander
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21. …….a success for whom???
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22. Case study – Westland Shipyard vs. SMIL
Situation
Westland subcontract paintwork of potable water tanks to Goodpaint AS
Goodpaint AS is adding thinner to the paint
Remove paint and repaint the potable water tanks
Westland have builders risk policy in force with SMIL
Newbuilding insured under NMIP 1996 (version 2010)
Claim submitted: NOK 5mill.
Evaluation
Claim recoverable (fully or partially) or not?
Refer to clauses in NMIP to support your answer
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23. Main issues to consider
Damage?
Peril - causation?
Loss recoverable?
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