SHIPBUILDING RISKS INSURANCE

There is a direct connection between shipbuilding and financial institutions, principally banks. Given the great value of ships, they can only be purchased through credits. The purchaser of a ship provides security to a bank by way of ship mortgage. Through the service of the ship he pays off the loan, often in seven to eight years` time. Credit insurance is indispensable in this part of business. The mortgage debtor may become unable to pay off the credit for a number of reasons, including the ruin of a mortgaged ship. Banks which finance the construction of a ship are more exposed to risks as compared to the financing of construction on land only. Ships under way change jurisdiction when subject to seizure. Claims secured by statutory lien, have priority for collection as compared to claims secured by ship mortgage.
In the event of a dispute, the enforcement of our law should be provided, by all means, together with the jurisdiction of our courts (arbitration). This is possible with shipyard, builder’s risk and credit insurance contracts.