Erection All Risks (EAR)

EAR policies are designed to cover the risk of loss arising out of erection and installation of machinery, plant and steel structures. It includes physical damage to the contract works, equipment and machinery, and liability for third-party bodily injury (BI) or property damage (PD) arising out of these operations. Coverage for delay in start-up (DSU) costs is typically an optional coverage. For examples Power plants, manufacturing and fabrication facilities, water and wastewater treatment facilities, and telecommunications centres (particularly where the erection of signal towers is involved).
We want to earmark the difference between Contractors All Risk Insurance & Erection All Risk Insurance.CAR covers the construction of civil works related to engineering works while Erection All Risk insurance covers the erection of installation related to engineering works. Some insurers combine EAR and CAR coverage into one form. However, these terms are used interchangeably.

Scope

The Erection All Risks insurance, provides a comprehensive insurance solution covering a wide range of risks to which project work is exposed to, starting right from the arrival of material at the site till successful testing and commissioning and handing over of the project to the principal owners.
This policy is beneficial for Principal owners, contractors, consulting engineers, architects and financiers because it contributes to reducing the overall construction and erection expenses and offers them protection against unforeseen accidents leading to financial losses.

Key Benefits

• Offers comprehensive insurance cover for accidental losses during the erection of projects and provides cover during storage, erection, and testing of property at the insured site.
• Policies are issued for the entire period of the project rather than on an annual basis.
• Installment facility to pay premium for project period over 12 months
• Offers various add-ons as per customers' needs

Coverage

This is an 'All Risk' policy covering sudden and unforeseen physical damage to projects under erection in by an insured peril and not specifically excluded under the policy and resulting during:

• Erection/ assembly
• Storage
• Testing
• Commissioning
  Covers Available
• Fire, lightning, explosion, aircraft damage
• Riot, strike, malicious act
• Flood, inundation, storm, cyclone and allied perils
• Landslide, subsidence and rockslide
• Burglary and theft
• Faults in erection
• Human errors, negligence
• Short-circuiting, arcing, excess voltage
• Electrical and mechanical breakdown
• Collapse, damage due to foreign object, impact damage
• Any other sudden, unforeseen, accidental damages not explicitly excluded

Add on Covers

• Third-party liability
• Cross liability
• Clearance and removal of debris
• Express freight
• Holiday and Overtime rates and Wages
• Airfreight
• Additional customs duty
• Escalation
• Owner's surrounding property
• Storage risk at fabricator's premises
• Maintenance cover
• Earthquake
• Terrorism
• Contractor's plant and machinery

Exclusions

• Loss or damage due to faulty design, defective material of casting and/or bad workmanship
• Manufacturing defects
• Loss or damage due to willful act or willful negligence
• Consequential losses, contractual liabilities
• Loss or damage due to war or warlike operations
• Loss or damage due to nuclear reaction, nuclear radiation or radioactive contamination
• Losses due to normal wear and tear, gradual deterioration
• Cessation of work
• Inventory losses
• Scratching of the painted or polished surface, Breakage of glass
• Cost of rectification or correction of any error during erection not resulting in physical loss or damage.
• Damage to files, drawings, accounts and bills etc
• Penalties for non-fulfilment of contractual obligations
• Operational deficiencies
• Costs of any alterations, additions and/or improvements after a claim
• Contractor's Plant and Machinery loss or damage by its explosion/mechanical, electrical breakdown/derangement

Claim Process

In the event of loss, the following are immediate actions to be taken
Intimate the insurer the occurrence of loss, submit a full statement in writing of the claim, provide the nature and extent of loss and also the estimate of loss. Any delay in intimation might jeopardize the claim as the insurer may express an inability in accepting liability of the loss/damage.

• To take all steps to reduce and minimize the extent of loss/damage and liability.
• The proximate cause of the loss and assess the type/extent and whether it is within the scope of the policy.
• To extend full co-operation to the insurer and the surveyor appointed for completion of the survey work and proper assessment of the loss.
• Produce all such records and proof as may be required by the surveyor or the insurer for arriving at the extent of loss and the liability under the policy.
• Provide documents such as claim form, Claim bill, copy of policy etc.
• Keep the damaged property under the safe custody until advised by the surveyor/insurer regarding its disposal.
• Identification of the subject-matter insured.