Erection All Risks (EAR) Insurance is designed to protect the interest of principals, contractors and Sub-contractors involved in erection of plants, machinery and heavy equipment, against their exposure to loss, damage or liability by a variety of external and internal causes right from the warehouse of the supplier of equipments — whether imported or indigenous — to its erection, testing and commissioning at the site.
In case the supplier has arranged transit insurance up to the site, a storage-cum-erection policy can be issued limiting coverage to risks that the project is exposed to at the site of installation only.
EAR Insurance has two sections providing coverage as under:
Physical loss or damage: This section provides coverage for losses and/or damages to materials and erection works
Third party legal liability: This section provides indemnity to the insured against Legal liability on account of negligence of the insured or his employees causing accidental bodily injury and/ death or damage to property belonging to any Third Party.
Policy Scope and Coverage
EAR Insurance provides a very wide cover. Any sudden and unforeseen loss or damage occurring to the property insured on the erection site during the period of transit storage, erection, testing and commissioning will be indemnified. The causes of losses indemnifiable are:
- Accidental damage during transit
- Fire and act of God perils
- Theft, burglary
- Faults in erection
- Negligence, lack of skill and experience in erection malicious acts
- Explosion, collapse, short circuit, arcing, excess voltage
The cover is subject to some exclusions such as :
- Loss or damage due to faulty design, defective material or casting and/or bad workmanship in equipment manufacture
- Wilful negligence
- Consequential loss
- War and kindred perils
- Nuclear risks
- Cessation of work
- Inventory losses
Additional covers can be structured as extension to the basic EAR cover, to suit the requirement of the contract. Some of the extensions are :
- Clearance of debris
- Damage to existing structure and/or surrounding property
- Contractor’s plant and equipment
- Expediting expenses
- Cross liability
- Maintenance period risks
- Strike, riot and civil commotion
- Express freight/air freight
- Offsite storage
Premium is charged on the total erection value of the contract and is based on factors such as nature, location of project site, period of erection, experience of contractors executing the erection work.