INSTITUTE CLAUSES FOR BUILDERS’ RISKS

I. INSURED VALUE
1.1 Whereas the value stated herein is provisional, it is agreed that the final contract price, or the total building
cost plus…………………………………………..% whichever is the greater, of the subject-matter of this
Insurance shall be the Insured value.
1.2 Should the insured value, determined as above,
1.2.1 exceed the provisional value stated herein, the Assured agree to declare to the Underwriters
hereon the amount of such excess and to pay premium thereon at the full policy rates, and the
Underwriters agree to accept their proportionate shares of the increase,
or
1.2.2 be less than provisional value stated herein, the sum insured by this insurance shall be reduced
proportionately and the Underwriters agree to return premium at the full policy rates on the
amounts by which their respective lines are reduced.
1.3 Nevertheless, should the insured value exceed 125% of the provisional value, then the limits of indemnity
under this insurance shall be 125% of the provisional value, any one accident or series of accidents arising
out of the same event.
1.4 Notwithstanding the above it is understood and agreed that any variation of the value for insurance on
contemplated does not come within the scope of this clause and such a variation requires the specific
agreement of the Underwriters.

II. TRANSIT
Held covered at a premium to be arranged for transit not provided for in Section 1 or 11 above.

III. DELAYED DELIVERY

Held covered at the premium to be arranged in the event of delivery to Owners being delayed beyond the
provisional period(s) mentioned above, but in no case shall any additional period of cover extend beyond 30
days from completion of Builders’ Trials.

IV. DEVIATION OR CHANGE OF VOYAGE

Held covered in case of deviation or change of voyage, provided notice be given to the Underwriters
immediately after receipt of advices and any amended terms of cover and any additional premium required
by them be agreed.

V. PERILS

V.1 SUBJECT ALWAYS TO ITS TERMS, CONDITIONS AND EXCLUSIONS this insurance is against all
risks of loss of or damage to the subject-matter insured caused and discovered during the period of this
insurance including the cost of repairing replacing or renewing any defective part condemned solely in
consequence of the discovery therein during the period of this insurance of a latent defect. In no case
shall this insurance cover the cost of renewing faulty welds.
V.2 In case of failure or launch, the Underwriters to bear all subsequent expenses incurred in completing
launch.
VI. EARTHQUAKE AND VOLCANIC ERUPTION EXCLUSION
In no case shall this insurance cover loss damage liability or expense caused by earthquake or volcanic
eruption. This exclusion applies to all claims including claims under Clauses 13, 17, 19 and 20.

VII. POLLUTION HAZARD

This insurance covers loss of or damage to the Vessel caused by any governmental authority acting under
the powers vested in it to prevent or mitigate a pollution hazard, or threat thereof, resulting directly from
damage to the Vessel for which the Underwriters are liable under this insurance, provided such act of
governmental authority has not resulted from want of due diligence by the Assured, the Owners, or
Managers of the Vessel or any of them to prevent or mitigate such hazard or threat. Master, Officers, Crew
or Pilots not to be considered Owners within the meaning of this Clause 7 should they hold shares in the
Vessel.

VIII. FAULTY DESIGN

Notwithstanding anything to the contrary which may be contained in the Policy or the clauses attached
thereto, this insurance includes loss of or damage to the subject-matter insured caused and discovered

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 during the period of this insurance arising from faulty design of any part or parts thereof but in no case shall
this insurance

extend to cover the cost or expense of repairing, modifying, replacing or renewing such part or parts, nor any
cost or expense incurred by reason of betterment or alteration in design.

IX. NAVIGATION
IX.1 With leave to proceed to and from any wet or dry docks, harbours, ways, cradles and pontoons within
the port or place of construction and to proceed under own power, loaded or in ballast, as often as
required, for fitting out, docking, trials or delivery, within a distance by water of 250 nautical miles of
the port or place of construction, or held covered at a premium to be arranged in the event of such
distance being exceeded.
IX.2 Any movement of the Vessel in tow outside the port or place of construction held covered at a
premium to be arranged, provided previous notice be given to the Underwriters.

X. DEDUCTIBLE
X.1 No claim arising from a peril insured against shall be payable under this insurance unless the
aggregate of all such claims arising out of each separate accident or occurrence (including claims under
Clauses 13, 17, 19 and 20) exceeds 1% of Total Sum Insured in which case this sum shall be deducted.
Nevertheless the expense of sighting the bottom after stranding, if reasonably incurred specially for that
purpose, shall be paid even if no damage be found. This Clause 10.1 shall not apply to a claim for total
or constructive total loss of the Vessel or, in the event of such a claim, to any associated claim under
Clause 20 arising from the same accident or occurrence.
X.2 10.2 Claims for damage by heavy weather occurring during a single sea passage between two
successive ports shall be treated as being due to one accident. In the case of such heavy weather
extending over a period not wholly covered by this insurance the deductible to be applied to the claim
recoverable hereunder shall be the proportion of the above deductible that the number of days of such
heavy weather during the single sea passage.
The expression “heavy weather” in this Clause 10.2 shall be deemed to include contact with floating ice.
X.3 Excluding any interest comprised therein, recoveries against any claim which is subject to the above
deductible shall be credited to the Underwriters in full to the extent of the sum by which the aggregate of
the claim unreduced by any recoveries exceeds the above deductible.
X.4 Interest comprised in recoveries shall be apportioned between the Assured and the Underwriters, taking
into account the sums paid by the Underwriters and the dates when such payments were made,
notwithstanding that by the addition of interest the Underwriters may receive a larger sum than they
have paid.

XI. UNREPAIRED DAMAGE

XI.1 The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable
depreciation in the market value of the Vessel at the time this insurance terminates arising from such
unrepaired damage, but not exceeding the reasonable cost of repairs.
XI.2 In no case shall the Underwriters be liable for unrepaired damage in the event of a subsequent total
loss (whether or not covered under this insurance) sustained during the period covered by this
insurance or any extension thereof.
XI.3 The Underwriters shall not be liable in respect of unrepaired damage for more than the insured value at
the time this insurance terminates.

XII. CONSTRUCTIVE TOTAL LOSS

XII.1 In ascertaining whether the subject-matter insured is a constructive total loss, the insured value
shall be taken as the repaired value and nothing in respect of the damaged or break-up value shall be
taken into account.
XII.2 No claim for constructive total loss based upon the cost of recovery and/or repair shall be
recoverable hereunder unless such cost would exceed the insured value. In making this determination,
only the cost relating to a single accident or sequence of damages arising from the same accident shall
be taken into account.

XIII. GENERAL AVERAGE AND SALVAGE

XIII.1 This insurance covers the Vessel’s proportion of salvage, salvage charges and/or general
average, reduced in respect of any under-insurance, but in case of general average sacrifice of the

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 Vessel the Assured may recover in respect of the whole loss without first enforcing their right of
contribution from other parties.

XIII.2 Adjustment to be according to the law and practices obtaining at the place where the adventure
ends, as if the contract of affreightment contained no special terms upon the subject; but where the
contract of affreightment so provides the adjustment shall be according to the York-Antwerp Rules.
XIII.3 When the Vessels sails in ballast, not under charter, the provisions of the York-Antwerp Rules,
1974 (excluding Rules XX and XXI) shall be applicable, and the voyage for this purpose shall be
deemed to continue from the port or place or departure until the arrival of the Vessel at the first port or
place thereafter other than or place there is an abandonment of the adventure originally contemplated
the voyage shall thereupon be deemed to be terminated.
XIII.4 No claim under this Clause 13 shall in any case be allowed where the loss was not incurred to
avoid or in
connection with the avoidance of a peril insured against.

XIV. NOTICE OF CLAIM

In the event of loss damage liability or expense which may result in a claim under the insurance, prompt
notice shall be given to the Underwriters prior to repair and, if the subject-matter is under construction
abroad, to the nearest Lloyd’s Agent so that a surveyor may be appointed to represent the Underwriters
should they so desire.

XV. CHANGE OF INTEREST

Any change of interest in the subject-matter insured shall not effect the validity of this insurance.

XVI. ASSIGNMENT
No assignment of or interest in this insurance or in any moneys which may be or become payable
thereunder is to be binding on or recognised by the Underwriters unless a dated notice of such assignment
or interest signed by the Assured, and by the assignor in the case of subsequent assignment, is endorsed on
the Policy and the Policy with such endorsement is produced before payment of any claim or return of
premium thereunder.

XVII. COLLISION LIABILITY

XVII.1 The Underwriters agree to indemnify the Assured for any sum or sums paid by the Assured to
any other person or persons by reason of the Assured becoming legally liable pay by way of damages
for
XVII.1.1 loss of or damage to any other vessel or property on any other vessel
XVII.1.2 delay to or loss of use of any such other vessel or property thereon
XVII.1.3 general average of, salvage of, or salvage under contract of , any such other vessel or property
thereon where such payment by the Assured is in consequence of the Vessel hereby insured
coming into collision with other vessel.
XVII.2 The indemnity provided by this Clause 17 shall be in addition to the indemnity provided by the
other terms and conditions of this insurance and shall be subject to the following provisions:
XVII.2.1 Where the insured Vessel is in collision with another vessel and both vessels are to blame
then, unless the liability of one or both vessels becomes limited by law, the indemnity under this
Clause 17 shall be calculated on the principle of cross-liabilities as if the respective Owners had
been compelled to pay to each other such proportion of each other’s damages as may have
been properly allowed in ascertaining the balance or sum payable or to the Assured in
consequence of the collision.
XVII.2.2 In no case shall the Underwriters’ total liability under Clause 17.1 and 17.2 exceed their
proportionate part of the insured value of the Vessel hereby insured in respect of any one such
collision.
XVII.3 The Underwriters will also pay the legal costs incurred by the Assured or which the Assured
may be compelled to pay in consisting liability or taking proceeding to limit liability, with the prior written
consent of the Underwriters.

EXCLUSIONS

XVII.4 Provided always that this Clause 17 shall in no case extend to any sum which the Assured
shall pay for or in respect of
XVII.4.1 removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever

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 XVII.4.2 any real or personal property or thing whatsoever except other vessels or property on other
vessels
XVII.4.3 the cargo or other property on, or the engagements of, the insured Vessel
XVII.4.4 loss of life, personal injury or illness
XVII.4.5 pollution or contamination of any real or personal property or thing whatsoever (except other
vessels with which the insured Vessel is in collision or property on such other vessels).

XVIII. SISTERSHIP
Should the Vessel hereby insured come into collision with or receive salvage services from another vessel
belonging wholly or in part to the same Owners or under the same management, the Assured shall have the
same rights under this insurance as they would have were the other vessel entirely the property of Owners
not interested in the Vessel hereby insured; but in such cases the liability for the collision or the amount
payable for the services rendered shall be referred to a sole arbitrator to be agreed upon between the
Underwriters and the Assured.

XIX. PROTECTION AND INDEMNITY

XIX.1 The Underwriters agree to indemnify the Assured for any sum or sums paid by the Assured to
any other person or persons by reason of the Assured becoming legally liable, as Owner of the Vessel,
for any claim, demand, damages and/or expenses, where such liability is in consequence of any of the
following matters or things and arises from an accident or occurrence during the period of this
insurance:
XIX.1.1 Loss of or damage to any fixed or movable object or property or other thing or interest
whatsoever, other than the Vessel, arising from any cause whatsoever in so far as such loss or
damage is not covered by Clause 17.
XIX.1.2 Any attempted or actual arising, removal or destruction of any fixed or movable object or
property or other thing, including the wreck of the Vessel, or any neglect or failure to raise,
remove, or destroy the same
XIX.1.3 liability assumed by the Assured under contracts of customary towage for the purpose of
entering or leaving port or manoeuvring within the port
XIX.1.4 loss or life, personal injury, illness or payments made for live salvage.

XIX.2 The Underwriters agree to indemnify the Assured for any of the following arising from an
accident or occurrence during the period of this insurance:
XIX.2.1 the additional cost of fuel, insurance, wages, stores, provisions and port charges reasonably
incurred solely for the purpose of landing from the Vessel sick or injured persons or stowaways,
refugees, or persons saved at sea
XIX.2.2 additional expenses brought about by the outbreak of infectious disease on board the Vessel or
ashore
XIX.2.3 fines imposed on the Vessel, on the Assured, or on any Master Officer crew member or agent
of the Vessel who is reimbursed by the Assured, for any act or neglect or breach of any statute
or regulation relating to the operation of the Vessel, provided that the Underwriters shall not be
liable to indemnify the Assured for any fines which result from any act neglect failure or default
of the Assured their agents or servants other than Master Officer or crew member
XIX.2.4 the expenses of removal of the wreck of the Vessel from any place owned, leased or occupied
by the Assured
XIX.2.5 legal costs incurred by the Assured, or which the Assured may be compelled to pay, in
avoiding,
minimizing or contesting liability with the prior written consent of the Underwriters.

EXCLUSIONS

XIX.3 1Notwithstanding the provisions of Clauses 19.1 and 19.2 this Clause 19 does not cover any
liability cost or expense arising in respect of:
XIX.3.1 any direct or indirect payment of the Assured under workmen’s compensation or employers’
liability acts and any other statutory or common law, general maritime law or other liability
whatsoever in respect of accidents to or illness of workmen or any other persons employed in
any capacity whatsoever by the Assured or others in on or about or in connection with the
Vessel or her cargo materials or repairs.

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 XIX.3.2 liability assumed by the Assured under agreement expressed or implied in respect of death or
illness of or injury to any person employed under a contract of service or apprenticeship by the
other party to such agreement
XIX.3.3 punitive or exemplary damages, however described
XIX.3.4 cargo or other property carried, to be carried or which has been carried on board the Vessel but
this Clause 19.3.4 shall not exclude any claim in respect of the extra cost of removing cargo
from the wreck of the Vessel
XIX.3.5 loss of or damage to property, owned by builders or repairers or for which they are responsible,
which is on board the Vessel
XIX.3.6 liability arising under a contract or indemnity in respect of containers, equipment, fuel or other
property on board the Vessel and which is owned or leased by the Assured

XIX.3.7 cash, negotiable instruments, precious metals or stones, valuables or objects of a rare or
precious nature, belonging to persons on board the Vessel, or non-essential personal effects of
any Master Officer or crew member
XIX.3.8 fuel, insurance, wages, stores, provisions and port charges arising from delay to the Vessel
while awaiting a substitute for any Master, Officer or crew member
XIX.3.9 fines or penalties arising from overloading or illegal fishing
XIX.3.10 pollution or contamination of any real or personal property or thing whatsoever.

XIX.4 The indemnity provided by this Clause 19 shall be in addition to the indemnity provided by the
other terms and

conditions of this insurance.

XIX.5 Where the Assured or the Underwriters may or could have limited their liability the indemnity
under this Clause in respect of such liability shall not exceed Underwriters’ proportionate part of the
amount of such limitation.
XIX.6 In no case shall the Underwriters’ liability under this Clause 19 in respect of each separate
accident or occurrence or series of accidents arising out of the same event, exceed their proportionate
part of the insured value of the Vessel.

XIX.7 PROVIDED ALWAYS THAT

XIX.7.1 prompt notice must be given to the Underwriters of every casualty event or claim upon the
Assured which may give rise to a claim under this Clause 19 and of every event or matter
which may cause the Assured to incur liability costs or expense for which he may be insured
under this Clause 19
XIX.7.2 the Assured shall not admit liability for or settle any claim for which he may be insured under
this Clause 19 without the prior written consent of the Underwriters.

XX. DUTY OF ASSURED (SUE AND LABOUR)

XX.1 In case of any loss or misfortune it is the duty of the Assured and their servants and agents to
take such
measures as may be reasonable for the purpose of averting or minimizing a loss which would be
recoverable under this insurance.
XX.2 Subject to the provisions below and to Clause 10 the Underwriters will contribute to charges
properly and
reasonably incurred by the Assured their servants or agents for such measures. General Average,
salvage
charges (except as provided for in Clause 20.4) collision defence or attack costs and costs incurred by
the Assured in avoiding, minimising or contesting liability covered by Clause 19 are not recoverable
under this Clause 20.
XX.3 Measures taken by the Assured or Underwriters with the object of saving, protecting or
recovering the subjectmatter insured shall not be considered as a waive or acceptance of abandonment
or otherwise prejudice the rights of either party.
XX.4 When a claim for total loss of the subject-matter insured is admitted under this insurance and
expenses have been reasonably incurred in saving or attempting to save the subject-matter insured and
other property and there are no proceed, or the expenses exceed the proceeds, then this insurance
shall bear its pro rata share of such proportion of the expenses, or of the expenses in excess of the
proceeds, as the case may be, as may reasonably be regarded as having been incurred in respect of
the subject-matter insured.

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 XX.5 The sum recoverable under this Clause 20 shall be in addition to the loss otherwise
recoverable under this insurance but shall in no circumstances exceed the amount insured under this
insurance in respect of the Vessel.

The following clauses shall be paramount and shall override anything contained in this insurance inconsistent
therewith.

XXI. WAR EXCLUSION

In no case shall this insurance cover loss damage liability or expense caused by

XXI.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act
by or against a belligerent power
XXI.2 capture seizure arrest restraint or detainment (barratry and piracy excepted), and the
consequences thereof or any attempt thereat
XXI.3 derelict mines torpedoes bombs or other derelict weapons of war.

XXII. STRIKES EXCLUSION

In no case shall this insurance cover loss damage liability or expense caused by

XXII.1 strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil
commotions
XXII.2 any terrorist or any person acting from a political motive.

XXIII. MALICIOUS ACTS EXCLUSION

In no case shall this insurance cover loss damage liability or expense arising from

XXIII.1 the detonation of an explosive

XXIII.2 any weapon of war

and caused by any person acting maliciously or from a political motive.

XXIV. NUCLEAR EXCLUSION

In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by contributed
to by or arising from

XXIV.1 ionising radiations from contamination by radioactivity from any nuclear fuel or from any
nuclear waste from the combustion of nuclear fuel
XXIV.2 the radioactive, toxic, explosive or other hazardous properties of any explosive nuclear
assembly or nuclear component thereof
XXIV.3 any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or
radioactive force or matter.

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