Erection All Risk Insurance

The Erection All Risk (EAR) insurance covers loss or damage to projects that involves erection/ installation of plant, machinery, and equipment ranging from erection of a single machine to a large power plant. It protects a contractor or employer against physical loss or damage to the contract works, construction plant and equipment or machinery. It also includes cover for damage to property of third parties and bodily damage to third parties.

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What Is Erection All Risk Insurance?

The erection all risk insurance policy is a type of insurance policy that provides cover for any loss or damage caused during the Installation of machinery or equipment in the factory or an office. This policy provides the employer financial aid for such eventualities as it can put a break in implementation, cause financial burden and leave you feeling you have no control.

Who can take the insurance?

The policy can be taken out in the joint names of the contractor and the employer. All parties involved in any kind of construction may be insured:

  • General contractors
  • Subcontractors
  • Suppliers and manufacturers of equipment
  • Purchaser or owner

Key Features of Erection All Risk Insurance

  • Offers comprehensive insurance for erection of projects and provides cover during storage, erection, and testing of property at the insured site.
  • Provides coverage for the entire period of the project rather than on an annual basis.
  • Offers various add-ons as per customers’ needs.

What does Erection All Risk Insurance cover?

EAR cover begins from the time of unloading of the first consignment at the project site and terminates on completion of testing or handing over of the project to the principal employer, or the period chosen, whichever is earlier.

The following are the eventualities against which you are covered:

  • Fire, explosion, lightning, aircraft damage
  • Flood, storm, cyclone, landslide and allied perils
  • Riot, strike, malicious act
  • Faults in erection of building
  • Burglary and theft
  • Human errors, act of negligence.
  • Electrical and mechanical breakdown
  • Short circuiting, arcing, excess voltage
  • Collapse, damage due to foreign objects, impact damages
  • Any other sudden, unforeseen, accidental damages not explicitly excluded.

Add-on covers under Erection All Risk Insurance

Below are the available add-ons you can avail to extend your insurance cover:

  • Cross liability
  • Cost of clearance and removal of debris
  • Third-party liability
  • Express freight
  • Additional customs duty
  • Air freight
  • Escalation
  • Damage to owner's surrounding property
  • Maintenance cover
  • Holiday and overtime charges

What is not covered in Erection All Risk Insurance?

  • Loss or damage due to faulty design, defective material of casting and/or bad workmanship
  • Loss or damage due to willful act or willful negligence
  • Cessation of work
  • Manufacturing defects
  • Consequential loss
  • Inventory losses
  • Loss or damage due to nuclear reaction, nuclear radiation or radioactive contamination
  • Loss or damage due to war or warlike operations
  • Losses due to normal wear and tear, gradual deterioration

Erection All Risk Insurance-FAQs

  • Q: What do you mean by erection all risk insurance policy?

    Ans: Many project activities in an organization revolve around the storage of equipment, re-constructing or dismantling, moving/expanding, etc. which can eventually lead to significant risks.

    The Erection All Risk (EAR) policy offers coverage against any physical loss/damage caused due to construction work, installation of machinery, etc. Not only this, it will also take care of any damage caused to third-party properties (including bodily damage).

  • Q: Who can apply for erection all risk insurance policy?

    Ans: Both contractors, as well as employers, can apply for this policy either individually or in joint names. Different construction parties that can be insured under this policy include subcontractors, General Contractors, Equipment suppliers & manufacturers and also the buyer or the owner.
  • Q: What services does an erection all risk insurance policy offer?

    Ans: The cover starts from the time the first consignment unloads at the project site and terminates once the time the project is completed and handed over to the principal client.

    A few cases covered under this policy are fire, lightning, explosion, aircraft damage. It also covers any flood, cyclone, storm, landslide and related problems. In case any damage has been caused to your construction property due to malicious acts such as strike or riots, it would also be covered under the policy.

  • Q: What is excluded in erection all risk insurance?

    Ans: Any type of loss/damage caused due to faulty design, bad workmanship or defective material used in casting will not be covered. Nuclear reaction/radiation/radioactive contamination damages won’t be covered.
  • Q: What should we do to report losses within our deductibles?

    Ans: In case the loss occurred is less than your deductible, there isn’t any need to report the loss. However, in case you aren’t clear about your final loss amount or the total amount of the deductible, we recommend contacting the insurer to get further guidance.
  • Q: Is there any specific time limit set for submitting claims under erection all risk policy?

    Ans: Yes, every insurer has set a time limit to submit the claim documents. Therefore, it’s always advisable to submit the documents the moment they become available. The sooner you submit the documents, the sooner you will be able to get your claim.
  • Q: What should we do if a passenger/passerby gets injured due to a construction object? Should we inform the insurer even if the injury is a minor one?

    Ans: The Erection All Risk policy also takes care of your legal liabilities that arise due to a bodily injury or property damage caused to any third party. Hence, you should always inform your insurance company about any kind of injury caused to a third party even if it’s a minor one.
  • Q: What to do if the injured third party demands immediate reimbursement of his medical receipts?

    Ans: You should ask the third party to send you the medical receipts along with a claim letter. You need to send these documents to the insurer and the company will contact the person on your behalf.

    However, before forwarding the claim letter to the insurer, please make sure that the claimant has mentioned her/his contact details on the form including her/his address as well as a phone number.

    Please ensure that you don’t make any payment towards the third party until and unless you have been instructed by us to do so.