Erection All Risk Insurance
Erection All Risk Insurance covers risks related to machinery installation, testing, and erection, including physical damage and third-party liability.
- Financial risk coverage
- Project continuity support
- Comprehensive scenario coverage
Introduction to Erection All Risk Insurance
Erection All Risk (EAR) Insurance is a specialized insurance policy designed to cover the risks associated with the erection, installation, and testing of machinery, equipment, and structures. This policy provides comprehensive coverage against physical damage and third-party liability that may arise during the erection phase of a project.
Difference/Similarity between Erection All Risk Insurance & Contractor All Risk Insurance
| Feature | Contractor All Risk (CAR) Insurance | Erection All Risk (EAR) Insurance | Difference/Similarity |
|---|---|---|---|
| Scope of Coverage | Civil engineering and building construction projects | Erection, installation, and testing of machinery and equipment | Difference |
| Typical Projects | Buildings, bridges, roads, dams, tunnels, sewage systems | Power plants, manufacturing units, industrial equipment, steel structures | Difference |
| Phases Covered | Construction period, including maintenance | From unloading to testing/commissioning | Difference |
| Maintenance Period | Included for a specified duration post-completion | Typically not beyond testing and commissioning | Difference |
| Types of Risks Covered | Fire, explosion, theft, natural disasters, accidental damage during construction | Fire, explosion, accidental damage during erection, installation, testing | Difference |
| Specific Exclusions | Construction-specific defects due to design/workmanship | Erection-specific operational errors or manufacturing defects | Difference |
Difference/Similarity between Erection All Risk Insurance & Contractor All Risk Insurance
| Feature | Contractor All Risk (CAR) Insurance | Erection All Risk (EAR) Insurance | Difference/Similarity |
|---|---|---|---|
| Scope of Coverage | Civil engineering and building construction projects | Erection, installation, and testing of machinery and equipment | Difference |
| Typical Projects | Buildings, bridges, roads, dams, tunnels, sewage systems | Power plants, manufacturing units, industrial equipment, steel structures | Difference |
| Phases Covered | Construction period, including maintenance | From unloading to testing/commissioning | Difference |
| Maintenance Period | Included for a specified duration post-completion | Typically not beyond testing and commissioning | Difference |
| Types of Risks Covered | Fire, explosion, theft, natural disasters, accidental damage during construction | Fire, explosion, accidental damage during erection, installation, testing | Difference |
| Specific Exclusions | Construction-specific defects due to design/workmanship | Erection-specific operational errors or manufacturing defects | Difference |
| Policy Duration | Entire construction project duration, including maintenance | From unloading through erection, installation, testing/commissioning | Difference |
| Coverage | Material damage, third-party liability during construction | Physical loss/damage to property during erection, installation, testing, third-party liability | Similarity |
| Third-Party Liability | During construction activities | During erection and installation activities | Similarity |
| Common Exclusions | War, terrorism, nuclear risks, willful act, cessation of work, faulty design, wear and tear | War, terrorism, nuclear risks, willful act, cessation of work, faulty design, wear and tear | Similarity |
| Additional Coverage Options | Debris removal, professional fees, escalation clause, earthquake coverage, inland transit, employee personal effects and tools, sound/undamaged property destruction, leased equipment rental costs | External debris, incompatibility of undamaged machinery, errors & omissions, claim preparation cost, salvage disposal, temporary structures, plant & equipment, contractual liability, civil authority, increased customs duty | Similarity |
Definition of Erection All Risk Insurance
Erection All Risk Insurance covers any sudden and unforeseen physical loss or damage to the insured property during the erection, installation, and testing phases. It also includes coverage for third-party liability that may result from these activities.
Coverage Under Erection All Risk Insurance
Material Damage
Covers physical loss or damage to the property being erected or installed, including machinery and equipment.
Third-Party Liability
Covers legal liabilities to third parties for bodily injury or property damage resulting from erection activities.
Inland Transit
Covers loss or damage to insured property while being transported to the project site.
Employees' Personal Effects and Tools
Covers loss or damage to personal effects and tools of employees and project managers.
Sound/Undamaged Property Destruction
Covers the destruction of undamaged property necessary for the replacement and reinstatement of the damaged property.
Leased Equipment Rental Costs
Covers continuing rental charges on leased equipment damaged by an insured event.
Add-on Coverages Under Erection All Risk Insurance
Cover for External Debris
Covers costs and expenses incurred in demolishing or removing external debris accumulated due to an insured event.
Incompatibility of Undamaged Machinery
Covers costs to achieve compatibility of undamaged equipment with replacement equipment.
Errors & Omissions to Insure
Protects against unintentional errors and omissions in the policy.
Claim Preparation Cost
Covers costs incurred to prepare and submit a claim.
Salvage Disposal Coverage
Covers additional costs for disposal of salvage goods as per government regulations.
Temporary Structures and Plant & Equipment
Covers temporary structures, camps, material storage, and plant and equipment used at the project site.
Add-on Coverages Under Erection All Risk Insurance
Cover for External Debris
Covers costs and expenses incurred in demolishing or removing external debris accumulated due to an insured event.
Incompatibility of Undamaged Machinery
Covers costs to achieve compatibility of undamaged equipment with replacement equipment.
Errors & Omissions to Insure
Protects against unintentional errors and omissions in the policy.
Claim Preparation Cost
Covers costs incurred to prepare and submit a claim.
Salvage Disposal Coverage
Covers additional costs for disposal of salvage goods as per government regulations.
Temporary Structures and Plant & Equipment
Covers temporary structures, camps, material storage, and plant and equipment used at the project site.
Contractual Liability Cover
Covers legal liability for injury or damage imposed under a contract.
Civil Authority Clause
Covers loss or damage resulting from orders by governmental bodies.
Cover for Increased Customs Duty
Covers increased customs duty on replacement supplies.
Specific Add-On Covers
Inland Transit
Covers loss or damage to insured property while being transported to the project site, including loading and unloading.
Employees’ Personal Effects and Tools
Covers loss or damage to personal effects and tools of employees and project managers engaged in the contract.
Sound/Undamaged Property Destruction
Covers the destruction of undamaged property necessary for the replacement and reinstatement of the damaged property.
Leased Equipment Rental Costs
Covers continuing rental charges on leased equipment damaged by an insured event.
Cover for External Debris
Covers costs and expenses incurred in demolishing or removing external debris accumulated due to an insured event.
Specific Add-On Covers
Inland Transit
Covers loss or damage to insured property while being transported to the project site, including loading and unloading.
Employees’ Personal Effects and Tools
Covers loss or damage to personal effects and tools of employees and project managers engaged in the contract.
Sound/Undamaged Property Destruction
Covers the destruction of undamaged property necessary for the replacement and reinstatement of the damaged property.
Leased Equipment Rental Costs
Covers continuing rental charges on leased equipment damaged by an insured event.
Cover for External Debris
Covers costs and expenses incurred in demolishing or removing external debris accumulated due to an insured event.
Incompatibility of Undamaged Machinery
Covers costs to achieve compatibility of undamaged equipment with replacement equipment.
Errors & Omissions to Insure
Protects against unintentional errors and omissions in the policy.
Claim Preparation Cost
Covers costs incurred to prepare and submit a claim.
Salvage Disposal Coverage
Covers additional costs for disposal of salvage goods as per government regulations.
Temporary Structures and Plant & Equipment
Covers temporary structures, camps, material storage, and plant and equipment used at the project site.
Contractual Liability Cover
Covers legal liability for injury or damage imposed under a contract.
Civil Authority Clause
Covers loss or damage resulting from orders by governmental bodies.
Cover for Increased Customs Duty
Covers increased customs duty on replacement supplies.
Exclusions Under Erection All Risk Insurance
War and Terrorism
Losses due to war, terrorism, and civil commotion.
Nuclear Risks
Losses due to nuclear reaction, radiation, or radioactive contamination.
Willful Act or Negligence
Damage caused by the willful act or willful negligence of the insured.
Cessation of Work
Losses arising from the cessation of work, whether total or partial.
Why Should Companies Take Erection All Risk Insurance?
Financial Security
Protects against financial loss due to damage or liability claims.
Compliance
Helps meet contractual obligations requiring insurance coverage.
Risk Management
Enhances risk management by covering a wide range of potential losses.
Peace of Mind
Provides peace of mind to contractors and project owners.
Why Should Companies Take Erection All Risk Insurance?
Financial Security
Protects against financial loss due to damage or liability claims.
Compliance
Helps meet contractual obligations requiring insurance coverage.
Risk Management
Enhances risk management by covering a wide range of potential losses.
Peace of Mind
Provides peace of mind to contractors and project owners.
Key Suggestions to Make the Best Erection All Risk Insurance Plan
Accurate Valuation
Ensure accurate valuation of the project and equipment.
Comprehensive Coverage
Include all necessary add-on covers for full protection.
Regular Reviews
Regularly review and update the policy to reflect changes in the project.
Risk Assessment
Conduct thorough risk assessments to identify potential hazards.
Determining the Sum Insured Under Erection All Risk Insurance
The sum insured should be based on the total contract value, including materials, labor, and other costs. It should also account for potential cost escalations and additional expenses.
Types of Erection All Risk Insurance Policies
- Annual Policies: Cover multiple projects within a year.
- Single Project Policies: Tailored for individual projects.
How to Choose the Right Erection All Risk Insurance Policy
Assess Needs
Evaluate the specific needs and risks of your project.
Compare Policies
Compare policies from different insurers to find the best coverage.
Check Exclusions
Understand the exclusions and limitations of each policy.
Seek Expert Advice
Consult with insurance experts to make an informed decision.
How to Choose the Right Erection All Risk Insurance Policy
Assess Needs
Evaluate the specific needs and risks of your project.
Compare Policies
Compare policies from different insurers to find the best coverage.
Check Exclusions
Understand the exclusions and limitations of each policy.
Seek Expert Advice
Consult with insurance experts to make an informed decision.
Claims Process for Erection All Risk Insurance
Immediate Reporting
Report the incident to the insurer as soon as possible.
Documentation
Provide necessary documentation, including photos, reports, and proof of loss.
Assessment
The insurer will assess the damage and determine the claim amount.
Settlement
Once approved, the insurer will settle the claim based on the policy terms.
Case Studies of Erection All Risk Insurance in Action
A construction company successfully claimed for damage due to a fire outbreak on site, which covered the cost of rebuilding and replacing damaged materials.
A contractor faced a third-party liability claim when a passerby was injured on-site. The EAR insurance covered the legal and compensation costs.
Technological Innovations in Erection All Risk Insurance
Construction
Focus on coverage for construction materials and equipment.
Engineering
Include coverage for machinery breakdown and specialized equipment.
Infrastructure
Ensure protection against natural disasters and large-scale damages.
Industry-Specific Considerations for Erection All Risk Insurance
Drones
Use of drones for site inspections and risk assessments.
IoT Sensors
Implementation of IoT sensors for real-time monitoring and risk management.
AI and Big Data
Leveraging AI and big data for predictive analytics and tailored policies.
Industry-Specific Considerations for Erection All Risk Insurance
Drones
Use of drones for site inspections and risk assessments.
IoT Sensors
Implementation of IoT sensors for real-time monitoring and risk management.
AI and Big Data
Leveraging AI and big data for predictive analytics and tailored policies.
Common Pitfalls and How to Avoid Them Under Erection All Risk Insurance
Underinsurance
Ensure the sum insured accurately reflects the project’s value.
Incomplete Coverage
Include necessary add-on covers to avoid gaps in coverage.
Ignoring Exclusions
Understand and account for policy exclusions to avoid surprises during claims.
Common Pitfalls and How to Avoid Them Under Erection All Risk Insurance
Underinsurance
Ensure the sum insured accurately reflects the project’s value.
Incomplete Coverage
Include necessary add-on covers to avoid gaps in coverage.
Ignoring Exclusions
Understand and account for policy exclusions to avoid surprises during claims.
Future Trends in Erection All Risk Insurance
Increased Use of Technology
Growing adoption of AI, IoT, and big data in risk management and claims processing.
Customized Policies
More tailored policies to meet specific industry needs.
Sustainability Focus
Inclusion of green building and sustainability-related coverages.
FAQs
What is the primary purpose of Erection All Risk Insurance?
The primary purpose is to provide comprehensive coverage for property damage and third-party liability during erection, installation, and testing phases.
What types of losses are covered under Erection All Risk Insurance?
It covers material damage, third-party liability, and loss or damage to construction plant and equipment.
Does Erection All Risk Insurance cover losses due to natural disasters?
Yes, natural disasters can be covered if included in the policy or through add-on covers.
What are the common exclusions in Erection All Risk Insurance?
Common exclusions include wear and tear, defective design, war and terrorism, and contractual liability.
How is the indemnity period defined in Erection All Risk Insurance?
The indemnity period is the duration for which the insurance will cover the financial impact of a loss, typically starting from the date of the incident.
Can Erection All Risk Insurance be customized for different industries?
Yes, policies can be tailored to meet the specific needs and risks of different industries.
What documentation is required to make a claim under Erection All Risk Insurance?
Documentation typically includes incident reports, photos, proof of loss, and any other relevant records.
Are wages of employees covered under Erection All Risk Insurance?
Wages may be covered if specified in the policy or through add-on covers for business interruption.
How does Erection All Risk Insurance handle losses due to the enforcement of building codes?
Coverage for losses due to building code enforcement can be included as an add-on cover.
What happens if the insured does not reinstate the sum insured after a loss under Erection All Risk Insurance?
Failure to reinstate the sum insured may result in reduced coverage for subsequent claims.
Can the policy cover professional fees for restoring business records under Erection All Risk Insurance?
Yes, professional fees can be covered if included in the policy or through add-on covers.
How does the policy handle the interruption caused by vandalism or civil commotion?
Vandalism and civil commotion can be covered if specified in the policy or through add-on covers.
Is loss of market covered under Erection All Risk Insurance?
Loss of market is typically excluded unless specifically included as an add-on cover.
Does the policy cover increased costs due to the resumption of operations?
Increased costs due to resumption of operations can be covered if specified in the policy or through add-on covers.
Are there any special conditions for including add-on covers like earthquake damage?
Yes, special conditions for add-on covers like earthquake damage may include additional premiums and specific terms.
What steps should the insured take immediately after a loss to ensure compliance with the policy conditions?
Steps include reporting the incident promptly, securing the site, documenting the damage, and cooperating with the insurer’s investigation.
Are legal and clerical charges for restoring documents covered under the policy?
Legal and clerical charges can be covered if specified in the policy or through add-on covers.
What is the co-insurance clause in Erection All Risk Insurance?
The co-insurance clause requires the insured to bear a percentage of the loss, typically to encourage risk-sharing and loss prevention.
What is the difference between Fire Insurance and Erection All Risk Insurance?
Fire Insurance covers only fire-related damages, while Erection All Risk Insurance covers a broader range of risks including fire, theft, natural disasters, and third-party liabilities.
How is the indemnity period determined?
The indemnity period is determined based on the time needed to restore the project to its pre-loss condition.
Can I claim for future losses under Erection All Risk Insurance?
Claims for future losses are generally not covered unless specified in the policy.
Is increased cost of working always covered?
Increased cost of working can be covered if specified in the policy or through add-on covers.
How are policy exclusions defined in Erection All Risk Insurance?
Policy exclusions are conditions or events that are not covered under the insurance policy, such as war, nuclear risks, willful acts, and inherent defects.
What is the process for making a claim under Erection All Risk Insurance?
The process involves notifying the insurer, submitting a claim form, providing evidence of loss, and cooperating with the insurer’s investigation.
How does the policy handle temporary repairs?
Temporary repairs necessary to prevent further damage are typically covered, but the cost must be part of the final repair expenses.
What is the policy on maintenance period coverage?
Maintenance period coverage includes loss or damage caused by the contractor during maintenance visits as per the contract obligations.
How does the policy cover surrounding property?
Surrounding property is covered for loss or damage occurring due to the insured construction activities, provided it is specified in the policy.
Are damages due to faulty design covered?
Damages due to faulty design are generally excluded unless specified otherwise in the policy.
What are the conditions for extending the insurance period?
The insurance period can be extended if the construction work is not completed within the original period, subject to additional premium.
How does the policy handle losses during the erection period?
Losses during the erection period are covered if they are due to insured perils and within the terms and conditions of the policy.
Is loss or damage to construction equipment covered?
Loss or damage to construction equipment is covered if specified in the policy, excluding losses due to mechanical or electrical breakdown.
How are Acts of God perils defined in the policy?
Acts of God perils include natural disasters like earthquakes, floods, storms, and other major perils specified in the policy.
What is the coverage for third-party liability?
Third-party liability covers legal liabilities for accidental loss or damage to third-party property and injuries to third parties arising from construction activities.
How is the sum insured determined for the policy?
The sum insured should represent the complete value of the construction works, including materials, labor, and associated costs.
Are there special provisions for handling major perils?
Yes, the policy includes provisions for major perils such as earthquakes and floods, often requiring additional premiums and specific conditions.
What is the coverage for debris removal?
Debris removal is typically covered for the cost of clearing and removing debris following an insured event, up to the specified limit in the policy.
How does the policy handle disputes or grievances?
The policy outlines procedures for resolving disputes and grievances, including contacting the insurer’s customer care and approaching the Insurance Ombudsman if necessary.
What are the conditions for the reinstatement of the sum insured?
Reinstatement of the sum insured after a loss may require payment of additional premiums to maintain full coverage for the remaining policy period.
Are there any conditions for storing construction materials and equipment?
Yes, the policy may specify conditions for the safe storage of materials and equipment to minimize the risk of theft or damage.
How are claims involving multiple insurers handled?
If multiple insurers cover the same risk, each insurer will pay its rateable proportion of any claim, as specified in the policy conditions.
What is the coverage for express freight and overtime charges?
Coverage for express freight and overtime charges can be included as an extension, subject to additional premiums and specific conditions.
How does the policy address changes in the risk during the construction period?
The insured must notify the insurer of any material changes in risk, and the scope of cover and premium may be adjusted accordingly.
What is the excess or deductible in the policy?
The excess or deductible is the amount the insured must bear for each claim before the insurer pays the remaining amount.
Are there any special endorsements available under the policy?
Yes, special endorsements such as limited maintenance visits cover, extended maintenance cover, and additional customs duty cover can be added to the policy.
How are losses due to theft or burglary handled?
Losses due to theft or burglary are covered if they occur during the policy period and meet the policy conditions, including immediate notification to the police and insurer.
What is the policy on sub-contractors and their role in the coverage?
Sub-contractors can be covered under the policy if specified, and their work must comply with the policy terms and conditions.
How does the policy cover temporary works and structures?
Temporary works and structures are covered if they are necessary for the completion of the contract works and specified in the policy.
What are the exclusions related to the cessation of work?
The policy excludes coverage for losses or damages resulting from the total or partial cessation of work.
Are consequential losses covered under the policy?
Consequential losses, such as loss of profit or delay penalties, are generally excluded unless specifically included as an extension.
How does the policy handle inspection and examination of the risk?
The insurer has the right to inspect and examine the risk at any reasonable time, and the insured must provide all necessary details and information.
What are the conditions for policy cancellation?
The policy can be canceled by the insured or the insurer, with conditions specified for premium refund and notification periods.
How is the premium adjusted based on the actual contract value?
Premium adjustments are made based on the actual values declared at the completion of the construction, considering freight, handling charges, and construction costs.
What is the policy on major perils claims?
Major perils claims, such as those arising from earthquakes and floods, are covered if they meet the policy terms and conditions, often requiring additional premiums.
How are professional fees for consultants and architects covered?
Professional fees for consultants and architects may be covered if included as an extension in the policy.
Are there any special conditions for high-value projects?
High-value projects may require additional coverage and specific conditions, including higher premiums and detailed risk assessments.
How does the policy handle damage to underground utilities?
Damage to underground utilities is covered if the exact position was traced before work commenced and if the damage is due to an insured event.
Are leaks during cleaning pipelines covered?
Leaks are covered if they result from an insured event and within specified policy limits.
How does the policy handle abandoned shafts?
Loss or damage from abandoned shafts is excluded from coverage.
Are crops and forests covered during construction?
No, damage to crops, forests, and other cultivated areas during construction is excluded.
What is the policy on existing underground cables during construction?
The insured must trace the exact position of underground cables before work starts. Indemnity is limited to repair costs only.
Secure Your Installation Projects
Protect your machinery installation and testing processes with Erection All Risk Insurance from Go Insure India. Covering physical damage and third-party liability, this policy ensures seamless project execution and financial security against unforeseen risks.