🛡️ Securing Your Build: Insurance Strategies for Newbuild Projects

My name is Davide Ramponi, I’m 20 years old and currently training as a shipping agent in Hamburg. On my blog, I take you with me on my journey into the exciting world of shipping. I share my knowledge, my experiences, and my progress on the way to becoming an expert in the field of Sale and Purchase – the trade with ships.

Building a ship is one of the most complex and capital-intensive undertakings in the maritime world. From design and procurement to keel laying and delivery, newbuild projects involve hundreds of stakeholders, long timelines, and millions—if not hundreds of millions—of dollars at stake.

In a perfect world, everything would go according to plan.But in the real world, there’s steel damage, weather delays, fires, design flaws, payment disputes, and component failures. That’s where insurance becomes your best ally.

In this blog post, we’ll explore:

• 🧾 The essential insurance policies for the build phase

• ⚠️ Common coverage gaps and how to avoid them

• 🧮 How claims are managed and disputes resolved

• 📊 The factors that influence premiums—and how to lower them

• 🤝 The broker’s role in structuring the right protection

Whether you're a shipowner, project manager, or yard representative, understanding how risk is transferred is key to protecting your timeline, your budget, and your reputation.

🧾 The Core Insurance Policies Every Newbuild Needs

Let’s start with the basics. Newbuild projects typically require multiple insurance policies to cover different types of exposure—ranging from physical damage to liability and third-party risk.

Here’s what a typical newbuild insurance portfolio looks like:

1. Builder’s Risk (Construction All Risks - CAR)

🔧 Covers physical loss or damage to the vessel during construction.

What it includes:

• Fire, explosion, storms, floods

• Welding damage, construction errors, dropped tools

• Equipment installed at yard or during outfitting

• Launching, sea trials, and delivery transit

Who’s covered: 

Usually the shipbuilder, but the shipowner can also be a named insured.

2. Shipowner’s Interest Insurance (SOI)

🚢 Protects the buyer’s financial interest if something happens before the ship is handed over.

Why it matters: 

If the shipyard goes bankrupt or the vessel is delayed beyond a contractual milestone, SOI covers the owner's advance payments and lost financial opportunities.

3. Third-Party Liability

👷 Covers claims for injury, property damage, or environmental damage caused during the construction phase.

Often included in the yard’s general liability policy—but should be cross-checked to cover subcontractors, suppliers, and visitors.

4. Delay in Delivery Insurance (DSU / ALOP)

📆 Offers protection against revenue loss if delivery is delayed due to an insured event.

Common in cruise, offshore, and LNG sectors—where charters, terminal slots, or project timelines are tightly scheduled.

5. Professional Indemnity (Design Risk)

📐 Protects against errors in design or engineering that lead to losses—even if there’s no physical damage yet.

Essential when multiple naval architects or design consultancies are involved.

🎯 Pro Tip: 

Work with your broker to map the full construction value chain. Every component, subcontractor, and milestone carries its own set of insurable risks.

⚠️ Common Coverage Gaps—and How to Plug Them

Even comprehensive insurance packages can leave you exposed if the details aren’t carefully managed. Here are the most frequent blind spots:

1. Outfitting Work Outside the Yard

Is the vessel going to another location for final installations? If so, CAR coverage may not extend there. You'll need:

• An endorsement to cover off-site works

• Inland transit insurance for component delivery

2. Subcontractor Negligence

If a fire is caused by a third-party electrical subcontractor, are they insured?🔍 Make sure all contractors carry their own liability cover, or ensure the CAR policy wraps around them.

3. Defective Design vs. Resulting Damage

Many CAR policies exclude design flaws. But they can cover the resulting damage (e.g., a poorly designed tank ruptures—tank design not covered, but fuel damage is).

🛠️ Add a LEG 2/96 or LEG 3 clause to strike the right balance.

4. Cyber Exposures

Modern ship systems rely on connected tech—ECRs, DP systems, digital commissioning.Standard policies often exclude cyber incidents unless specifically endorsed.

🎯 Solution: 

Include a cyber extension in builder’s risk or carry a separate cyber policy.

⚖️ Claims Management and Dispute Resolution

Even with good cover, things can go wrong—and when they do, claims handling makes or breaks the process.

🔄 What happens when you file a claim?

1. Notify the insurer immediately (within hours if it’s major damage)

2. Appoint a surveyor or loss adjuster to assess and document the incident

3. Submit all evidence—logs, photos, progress records, technical specs

4. Negotiate with the insurer (with your broker’s help) on valuation and scope

5. Resolve payment—often in tranches as repair work proceeds

🧩 Key dispute resolution clauses:

• Jurisdiction: Which country's court applies

• Arbitration: Private resolution (e.g., under LMAA or ICC rules)

• Subrogation: Ensures insurers can’t go after your contractors unless there's gross negligence

🎯 Tip: 

Always have an insurance lawyer review dispute clauses in your SBC (Shipbuilding Contract) and policy wording.

📊 What Drives Premiums—and How to Lower Them

Insurance isn’t just about protection—it’s also about cost. So what influences how much you pay?

💸 Top premium drivers:

• Ship type and complexity (LNG vessels and offshore rigs = higher risk)

• Project value and timeline length

• Location of build (some shipyards have higher risk scores)

• Loss history of the shipyard or owner

• Past claims, fire protocols, yard certifications

📉 How to reduce your premiums:

• Conduct a pre-risk survey to prove yard standards are high

• Install monitoring and fire detection tech

• Use only certified subcontractors and material suppliers

• Document every step in a digital project log—this helps in claims and negotiations

• Bundle policies into a comprehensive package—insurers like efficiency

🎯 Tip: 

Insurers reward transparency. If you share your quality control protocols and inspection plans up front, you often get better terms.

🤝 The Broker’s Role: Structuring the Right Risk Package

A good broker doesn’t just shop for the lowest price—they build a tailored risk solution around your specific project needs.

🚀 What your broker should deliver:

• Risk mapping workshops with the yard and technical team

• Custom policy wording to match your SBC and milestones

• Cross-checks to eliminate overlaps or exclusions between policies

• Claims support—they help manage negotiations, not just introductions

• Market leverage—access to specialist underwriters in marine construction

🧭 Brokers also help align contractual risk transfer—ensuring the right party carries the right liability at each project stage.

🎯 Final thought: 

Bring your broker in early—not after the contract is signed or the steel is cut.

🧠 Conclusion: Insurance Is a Tool, Not an Afterthought

Too often, insurance is treated like a checkbox—filed at the last minute before project start. But in reality, it’s a critical enabler of complex newbuild projects.

Done right, it creates confidence:📈 In schedules.💸 In investments.🛠️ In operations.

Key Takeaways 🎯

• Use CAR, SOI, liability, DSU, and PI insurance to cover the full project spectrum

• Plug gaps in location, cyber, subcontractor, and design coverage

• Understand how claims and disputes are handled

• Optimise premiums through risk transparency and preparation

• Leverage your broker’s full expertise, from contract review to crisis support

📣 Whether you're building a ferry, tanker, or offshore support vessel, your insurance strategy should be as engineered as the vessel itself.

👇 What do you thing?

Have you faced claims challenges during a newbuild? Or structured insurance around a high-risk project?

💬 Share your thoughts in the comments — I look forward to the exchange!

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