Builders' Risk Insurance. Extent of. General Nature of the Risk.

    This branch of marine insurance is comparatively recent, and probably represents the most important new development in the business. It relates to the risk connected with the construction and repairing of hulls, and for this reason is often classified as a branch of hull marine insurance. As yet the business has not assumed large proportions as far as American Companies are concerned, but there are indications that point to greater prominence in the near future. Returns from fifty-three American Companies for 1918, 1 showed that twelve transacted no business of this character ; that six received one-half of one per cent of their marine premium income from this source; seven between one-half of one and one per cent; four between one and two per cent; six between two and three per cent; five between three and four per cent; four between four and five per cent; four between six and seven per cent; one between eight and nine per cent; three, ten per cent; and one, thirty-four per cent. Much the same situation is shown by the reports received from American branch offices of foreign admitted companies. But, as in the case of hull insurance, the practice of exporting insurance directly to the foreign market is also resorted to very largely in the case of builders' risk insurance.

    General Nature of the Risk.
The nature of the risk covered differs so radically from the other ordinary types of marine insurance that it was found necessary to use an entirely different form of policy. 2 Strictly speaking, marine insurance covers property which is afloat. But as already noted, marine insurance is reaching inland, and, as in the case of the warehouse to warehouse clause, is to that extent becoming transportation insurance. To a large extent builders' risk insurance represents another encroachment, since it protects the vessel before it takes to the water, and to this extent is essentially a " shore cover." All things considered, the policy in general use is exceedingly liberal in its wording and probably represents the nearest approach to full protection that can be found in the insurance .market. During the war ship- building in this country was mostly conducted by the Government, and the risk was carried under a self-insurance arrangement. But with the coming of peace the business will in all probability revert back to private underwriters, and with the tremendous impetus given to shipbuilding in the United States during the last few years there is every reason to believe that this branch of the marine insurance business has a bright future before it.

Term of the Contract and Valuation of the Subject Matter.
Owing to the large size of modern steamers, builders' risk policies often involve very large amounts of insurance and run for long periods of time. The term of the contract begins from noon of a certain date (New York, Washington, Chicago, or some other time being specified) which is warranted by the insured to be the date of the laying of the keel, and extends until the vessel is delivered by the builders. Provision is made for the automatic extension of the insurance beyond the first year if the vessel should not be delivered within a specified time, such as twelve months from noon of the date on which the policy was issued. In such instances the only endorsement is one providing for the payment of an additional monthly premium for the further period at a certain agreed rate per annum. In consideration of such additional premium, receipt for which is attached to the contract, the policy is extended from noon of the date of expiration mentioned in the original policy until noon of the advanced date to which it is desired to extend the protection.

Quoting the policy, it covers "on hull, tackle, apparel, ordnance, munitions, artillery, engines, boilers, machinery, appur- tenances, etc. (including plans, patterns, molds, etc.), bolts, and other furniture and fixtures, and all material building and the underwriter's liability is specified in the policy, and the vessel and other property are covered " for so much as concerns the assured, by agreement between the assured and assurers " and are valued at a stipulated amount. Leave to increase the insurance from time to time is permitted, but in such instances the valuation will increase accordingly. This matter is important in order to determine to what extent the insured is a co-insurer. In other words, the underwriter is willing, in case of loss, to assume only his own proportion, i. e., he will pay the loss only in the proportion that the insurance carried bears to the completed contract price of the vessel. Provision is also made to the effect that the policy is " to pay its proportion of all general average and salvage charges, partial or total losses, without the right of subrogation of any remaining value in said vessel, etc." Additional fire insurance may also be taken out by the insured, such insurance to contribute pro rata with the builders' risk policy in the payment of any loss or damage by fire to the property insured. But should the loss or damage be due to causes other than fire, such additional fire insurance is not to be regarded as a part of the insured value.