Builders' Risk Insurance. The Premium

    Premium charges apply from the date of the commencement of the policy, and are based on the total liability which the underwriter would incur if the completed vessel (but before it is actually delivered) should become a total loss. Mention has already been made of the practice of charging an additional monthly premium in case of failure to effect delivery of the vessel by an agreed time. But it may happen that the vessel will be completed at an earlier date. In that event the policy may be canceled, and the underwriter agrees to return a certain percentage of the premium for each uncommenced month canceled. But it is expressly provided that the return premium shall not exceed a certain stated amount, such as, for example, one-half of the premium for the original term of the policy. The importance of this provision is apparent when we consider the unprecedented rapidity with which vessels were turned out during the recent war. Frequently construction was completed within a third or a quarter of the usual time required, and if underwriters were entitled to receive only that portion of the annual premium upon cancellation of the contract, their aggregate premium income would probably be so small as to render doubtful the payment of losses likely to occur. Risks Applying Prior to Launching. An analysis of the specific risks assumed under a builders' risk policy shows that they may be conveniently classified as relating either to the period before the launching is actually completed, or to the period after the vessel has taken the water and before it has been actually delivered to the owners. With reference to the first, the policy not only covers the perils ordinarily enumerated in a marine insurance contract, but greatly extends the under- writer's liability by providing that :

    This insurance is also to cover all risks, including fire, while under construction and /or fitting out, including materials in buildings, workshops, yards, and docks of the assured, or on quays, pontoons, craft, etc., and all risk while in transit to and from the works and /or the vessel wherever she may be lying, also all risks of loss or damage through collapse of supports or ways from any cause whatever, and all risks of launching and breakage of the ways. The wording of this clause is certainly broad, and would seem to meet the situation in full as regards the construction of the vessel. But two further clauses extend the underwriter's liability to consequential losses resulting from accidents to the equipment necessary to construct and launch a vessel. The first of these provides that, in case of failure to launch, the under- writer shall bear all subsequent expenses incurred in completing the launching. The second covers the damage, while the vessel is being built or fitted out and either before or after launching, to hull, machinery, apparel, or furniture, caused by settling of the stocks, or failure or breakage of shores, blocking or staging, or of hoisting or other gear.

Risks Applying Subsequent to Launching.
After the vessel has taken the water the builders' risk policy extends its coverage to all risks connected with the trial trips, " loaded or otherwise, as often as required, and all risks whilst proceeding . to and returning from the trial course." Any time during the currency of the policy the vessel is also permitted to proceed to and from any wet or dry-docks, harbors, ways, cradles, and pontoons. Naval vessels are permitted, in addition to the making of the trial trips, to fire their guns and torpedoes; but in the event of loss or damage resulting to the vessel or its machinery from this act the underwriter will not be liable unless there " results a total loss of the vessel." Moreover, the contract also covers negligence, explosions, breakage, and latent defects in a comprehensively worded Inchmaree Clause.

Liberality is also shown to the insured in the exercise of certain privileges. Not only does the contract contain the ordinary " Sue and Labor Clause," but the insured is given " leave to sail with or without pilots, to tow and be towed, and to assist vessels and /or craft in all situations, and to any extent." Deviation is permitted subject to an additional premium to be arranged. Changes of interest in the vessel are declared not to affect the validity of the policy. Average claims are payable irrespective of percentage, and without deduction of one-third, whether the average be particular or general. In the event of salvage, towage, or any other assistance rendered to the insured vessel, or any vessel belonging in part or in whole to the same owners, the value of the service, regardless of the common ownership of the vessels, will nevertheless be paid, following the ascertainment by arbitration.