What Is Engineering All Risk (EAR) Insurance?
Engineering All Risk Insurance at a Glance
- Protects: contract works, machinery and equipment at the project site, and temporary works during erection, installation, testing, and commissioning – subject to policy terms.
- Typical projects: power plants, manufacturing and fabrication facilities, water and wastewater treatment plants, telecom tower erection, and large industrial installations.
- Main coverage concept: accidental, sudden, unforeseen physical loss or damage not explicitly excluded – “all risk” means broad, not unlimited.
- Major exclusions: faulty design, defective material or workmanship, wear and tear, consequential loss, and war or nuclear risks.
- Who can purchase it: project owners, general contractors, subcontractors, and in some cases equipment suppliers or manufacturers, depending on insurable interest.
- Premium factors: project value, duration, construction type, location, machinery involved, and the insured’s risk-management practices.
- Excess/deductible: the insured retains a minimum share of every claim; this varies by equipment value and peril type.
- Basis of indemnity: temporary damage is normally settled on a repair-cost basis; permanent damage is settled on the item’s depreciated actual value.
- Claim process: notify the insurer promptly, preserve evidence, cooperate with the surveyor, and submit supporting documentation.
What Is Engineering All Risk (EAR) Insurance?
Engineering All Risk Insurance is a specialised form of project insurance built around the specific risks that arise while plant, machinery, and steel structures are being erected, installed, or constructed. Unlike a standard property policy that insures a completed, static building, EAR is designed to follow a project through its active construction and installation phase. In short, the reasoning is straightforward: a construction or erection site carries risks that don’t apply to a finished, occupied building – heavy lifting, partially assembled structures, exposed machinery, and a constantly changing site layout. EAR is built around this project-specific exposure, rather than around a fixed asset sitting in one place. EAR is commonly relevant to:
- Manufacturing and fabrication facility construction
- Power plant projects
- Water and wastewater treatment facility construction
- Erection of telecommunication signal towers
- Large-scale machinery and equipment installation
At its core, EAR responds to accidental physical loss or damage – sudden, unforeseen events, not gradual deterioration or foreseeable wear. The exact scope of “physical loss or damage” and which project components qualify as insured property depends entirely on the specific policy wording and the cover selected.
How Does Engineering All Risk Insurance Work?
In practice, EAR insurance follows the life of a project rather than a fixed location. A simplified way to think about the lifecycle: Project begins → policy arranged for the project period and location → project risks identified → insured work and assets exposed to site risk → accidental loss or damage occurs → claim notified → survey and assessment → loss evaluated against policy terms → settlement, subject to policy conditions. Key structural elements of how the policy works:
- Policy period – typically matches the construction or erection timeline, sometimes with an extended maintenance period.
- Project location – the specific site(s) where the insured activity takes place.
- Sum insured – reflects the value of the contract works, materials, and machinery being insured.
- Insured property – defined precisely in the policy schedule; not every project asset is automatically included.
- Covered events – the specific perils named in the policy, subject to exclusions.
- Deductibles/excess – the portion of every claim the insured retains.
- Extensions – optional add-ons for specific risks like earthquake, third-party liability, or delay in start-up.
- Claims – governed by the notification, documentation, and survey process set out in the policy.
Illustrative example: A contractor erecting industrial machinery at a new factory buys an EAR policy for the project’s 18-month construction period. Midway through, a partially installed piece of equipment is damaged when a lifting crane malfunctions. The contractor notifies the insurer, a surveyor inspects the site, and – subject to the policy’s terms and applicable excess – the repair cost is assessed for settlement. This is a simplified illustration only; actual claims depend on the specific facts and policy wording.
Who Can Purchase Engineering All Risk Insurance?
Essentially, eligibility to buy EAR insurance generally follows insurable interest in the project – a genuine financial or contractual stake in its successful, undamaged completion. Depending on the policy structure and project contract, the following parties are typically able to purchase or be named on an EAR policy:
- Project owners who have commissioned the work.
- Principal contractors responsible for delivering the project.
- Developers managing the overall project.
- Infrastructure companies undertaking large capital projects.
- Engineering companies carrying out technical installation work.
- EPC (Engineering, Procurement, Construction) contractors managing end-to-end delivery.
- Construction companies engaged in the civil works.
- Erection contractors specifically responsible for machinery or structural erection.
- Project financiers, where a policy structure allows their interest to be noted.
- Suppliers and equipment manufacturers, in certain project structures.
In practice, many EAR policies are arranged as a single project policy covering multiple parties – general contractors, subcontractors, and sometimes suppliers – under one combined form, since all of them share exposure to the same project risk. The precise list of insured parties depends on the policy structure and the underlying project contract.
Which Projects Can Benefit From EAR Insurance?
EAR insurance tends to suit projects with meaningful erection, installation, or construction risk, such as:
- Industrial projects
- Manufacturing plant construction
- Power projects
- Infrastructure projects
- Commercial construction involving structural or machinery risk
- Large building projects
- Machinery erection projects
- Plant expansion
- Equipment installation
- Combined engineering and construction projects
Ultimately, whether EAR is the right fit for a specific project depends on its characteristics – value, complexity, machinery content, and site conditions – and on individual insurer underwriting.
What Does Engineering All Risk Insurance Cover?
Coverage under an EAR policy depends on the selected cover, but commonly may include, subject to the policy wording:
Contract works
The physical structures, machinery, and equipment being erected or constructed under the project contract.
Materials at the project site
Materials brought on-site for use in the project, from the point they’re delivered.
Equipment and machinery involved in the project
Plant and machinery undergoing erection, installation, testing, or commissioning.
Temporary works
Structures built to support the main project during construction, where insured.
Construction/erection-related property
Property directly connected to the erection or construction activity, as defined in the schedule.
Accidental physical loss or damage
The central insuring concept – sudden, unforeseen physical loss or damage not explicitly excluded.
Certain natural perils
Where insured, perils such as fire, lightning, explosion, flood, storm, cyclone, landslide, subsidence, and rockslide.
Certain accidental external events
Where insured, events such as riot, strike, malicious acts, burglary, theft, faults in erection, human error, short-circuiting, arcing, excess voltage, electrical and mechanical breakdown, collapse, and impact damage from foreign objects. Depending on the policy, EAR may also extend to liability for third-party bodily injury or property damage arising from the insured operations at the worksite. In addition, elective add-ons may cover storage risk at a fabricator’s site prior to dispatch, debris clearance and removal, air cargo, cross liability, and additional third-party liability – where selected and underwritten. Importantly, none of the above is automatically included in every policy – coverage always depends on the policy wording, the cover selected, and applicable exclusions.
Engineering All Risk Insurance Coverage: At a Glance
| Asset / Exposure | Potential Coverage | What to Check |
|---|---|---|
| Contract works | Yes (core insured item) | Confirm scope in the policy schedule |
| Construction materials | Yes, from site delivery | Check the point at which cover attaches |
| Machinery at project site | Yes | Confirm testing/commissioning phases are included |
| Erection works | Yes | Core purpose of an EAR/erection policy |
| Temporary works | Depends | Often needs to be specifically listed |
| Project equipment | Yes | Check sub-limits for high-value items |
| Debris removal | Separate extension | Often needs to be added explicitly |
| Natural perils | Depends | Flood/earthquake often needs extension |
| Third-party liability | Separate extension | Usually needs specific third-party liability cover |
| Existing property (surrounding structures) | Depends | Often needs a specific extension or separate policy |
What Is Not Covered Under Engineering All Risk Insurance?
Common exclusion categories found under EAR policies may include, subject to actual policy wording:
- Faulty design, aesthetic defects.
- Defective material or bad workmanship.
- Manufacturing defects – the manufacturer or supplier’s own responsibility, by law or contract.
- Wear and tear, normal maintenance or making good, gradual deterioration.
- Intentional damage – wilful act or wilful negligence of the insured.
- Consequential losses unless specifically covered.
- Cessation of work.
- Disappearance or shortage (inventory losses).
- Loss of files, drawings, cash, cheques, and similar items.
- Breakage of glass, in many standard forms.
- Damage already covered under an AMC (annual maintenance contract) with a third party.
- Faults or defects existing at policy inception that the insured knew or ought to have known about.
- Electrical or mechanical breakdown, in many forms – often handled by a separate machinery breakdown policy.
- Equipment undergoing testing, in some forms, unless specifically included.
- Explosion of a boiler or pressure vessel, in some forms.
- Overload experiments or tests requiring abnormal conditions.
- Loss or damage to exchangeable tools and operating media.
- Total or partial immersion in tidal waters.
- Vehicles designed and licensed for general road use.
- Property whilst in transit (typically a marine/transit insurance matter).
- War, invasion, and warlike operations.
- Terrorism, in many standard forms, unless extended.
- Nuclear reaction, nuclear radiation, or radioactive contamination.
Common exclusions may include the above, but they vary by policy wording and insurer – always verify against the specific policy schedule and exclusion clauses.
EAR Insurance: Covered vs Excluded
| Event / Exposure | Potentially Covered? | What to Check |
|---|---|---|
| Accidental physical damage | Covered, generally | Core insuring clause |
| Fire | Covered, generally | Confirm as a named peril |
| Storm | Depends | Often a named peril; verify |
| Flood | Depends | May need extension in some forms |
| Earthquake | Depends | Often needs extension |
| Theft | Depends | Confirm burglary/theft is included |
| Faulty workmanship | Generally excluded | Design/workmanship defects are typical exclusions |
| Wear and tear | Generally excluded | Standard exclusion |
| Gradual deterioration | Generally excluded | Standard exclusion |
| Defective design | Generally excluded | Standard exclusion |
| Consequential loss | Generally excluded | Unless specifically covered |
| War | Generally excluded | Standard exclusion |
What Is the Basis of Indemnity in Engineering All Risk Insurance?
Indemnity in insurance means restoring the insured, as far as reasonably possible, to the financial position they were in immediately before the loss – no better, no worse. Specifically, in EAR insurance, the basis of indemnity generally follows two paths, depending on the nature of the damage.
Temporary damage (repairable damage)
Where the insured item can be repaired, insurers typically pay the necessary expenses to restore it to the condition it was in immediately before the damage, including:
- The cost of repair materials and labour.
- Additional costs of dismantling and re-erection during the repair.
- Freight to and from the repair location, where included in the sum insured.
- If the insured repairs the item at their own workshop: the cost of materials and wages incurred.
Depreciation is typically not deducted for repairable items or machinery, except where the item falls into a specifically defined limited-life category, in which case salvage value may be taken into account.
Permanent damage (total loss)
Where the insured item is damaged beyond repair, insurers typically pay the actual value of the item immediately before the damage occurred – meaning its depreciated value, not its original or replacement cost. This may also include freight, erection, and customs duties where these were included in the sum insured, and may account for salvage value if the damaged item retains any.
Additional agreed costs
Where specifically agreed and included in the policy, EAR cover may extend to costs such as overtime charges, night-work charges, work on public holidays, and express freight charges incurred to expedite repairs. Generally, provisional or temporary repairs are typically covered where they form part of the final repair and don’t increase the total claim cost.
What indemnity typically excludes
- Cost of alterations
- Cost of improvements
- Cost of overhauls (beyond restoring pre-damage condition)
Illustrative example: A piece of machinery at a construction site suffers accidental damage during erection. A surveyor determines it can be repaired rather than replaced. Consequently, the insurer would typically settle based on the repair cost, dismantling and re-erection expenses, and freight to the repair shop – subject to the policy’s excess, applicable limits, and any salvage adjustment. Overall, this is an illustrative example only; actual settlement depends on the policy wording and the surveyor’s loss assessment.
What Is Excess (Deductible) in Engineering All Risk Insurance?
Excess (or deductible) is the minimum portion of a loss that the insured must bear before the insurer pays the remainder. Insurers build an excess into EAR policies for a few practical reasons:
- The cost of processing very small claims can exceed the claim amount itself.
- It discourages the insured from filing claims for minor, routine amounts.
- It encourages the insured to act prudently and manage on-site risk.
- It keeps the insured financially invested in avoiding avoidable losses.
The applicable excess typically depends on:
- The sum insured for the specific machine or item involved.
- The type of plant or machinery.
- Whether the claim arises from an Act of God (AOG) peril – such as earthquake, flood, or storm – versus other causes.
When a loss affects one item, only one excess generally applies – usually calculated as a percentage of that item’s sum insured, or a stated minimum amount, whichever is higher. Notably, some EAR policies apply materially higher excess percentages to Act of God perils than to other causes of loss, reflecting the larger catastrophic exposure those perils represent. The specific bands, percentages, and minimums vary by insurer and policy – the figures above illustrate a common industry structure, not a fixed or universal rate; always confirm the applicable excess in your own policy schedule.
How Does Excess Affect EAR Insurance Premium?
The general relationship: Higher excess → potentially lower premium → higher amount retained by the insured when a covered claim occurs. In practice, this relationship is not necessarily linear, and final pricing is always subject to the insurer’s underwriting. A very high excess may not suit every project – particularly one with limited cash reserves to absorb a large retained loss.
| Excess Level | Potential Premium Effect | Claim Impact |
|---|---|---|
| Lower | Premium tends to be higher | Insured retains less of each loss |
| Medium | Premium effect varies by insurer | Balanced retention and premium |
| Higher | Premium may be lower | Insured retains more of each loss |
Some EAR policies allow a voluntarily assumed excess – where the insured agrees to a higher excess than the policy minimum in exchange for a reduced premium. This can suit projects with strong cash reserves and good risk management, but is a deliberate trade-off, not a default recommendation.
What Determines the Premium for Engineering All Risk Insurance?
EAR premium reflects a combination of project-specific and risk-management factors, including:
- Total project value and contract value.
- Project duration.
- Type of project (industrial, infrastructure, commercial, etc.).
- Construction or erection method.
- Location, including geological and weather-related exposure.
- Project complexity.
- Height or depth of the works, where relevant.
- Machinery and equipment involved.
- Fire-protection measures in place.
- Site security.
- Contractor experience and track record.
- Previous claims history.
- Risk-management systems in use.
- Coverage scope and selected extensions.
- Deductibles/excess chosen.
- Third-party liability requirements.
- Project-specific underwriting judgment by the insurer.
Instead, no fixed premium rates or universal percentages apply – pricing is determined by each insurer’s own underwriting of the specific project.
How to Minimise the Premium for Engineering All Risk Insurance
- Conduct a detailed project risk assessment before approaching insurers.
- Maintain proper safety procedures across the site.
- Use qualified, experienced contractors for erection and installation work.
- Maintain strong site security, including access control.
- In addition, implement fire-prevention systems – extinguishers, sprinklers, and monitoring.
- Follow recognised engineering standards for the work being performed.
- Maintain equipment properly through scheduled checks and servicing.
- Also, provide accurate project information to the insurer at every stage.
- Select an appropriate deductible rather than the lowest possible premium.
- Avoid unnecessary extensions that don’t match actual project risk.
- Maintain proper project documentation throughout the works.
- Finally, review coverage before project commencement, and again if scope changes.
In other words, do not reduce essential coverage merely to lower the premium – a cheaper policy that leaves a genuine project risk uninsured is not a saving.
Should You Choose a Lower Premium or Broader Coverage?
In short, lowest premium ≠ best policy. Before choosing on price alone, weigh:
- What perils are actually covered, versus what your project is exposed to.
- What is excluded, and whether that gap matters for this specific project.
- Policy limits and sub-limits relative to actual asset values.
- The excess level and whether the project can comfortably absorb it.
- Which extensions are genuinely relevant versus which are unnecessary padding.
- Claim conditions – documentation and notification requirements that could affect a real claim.
A policy that’s cheaper because it excludes a risk your project actually faces isn’t a better deal – it’s a gap you’ll discover at claim time.
How Is the Sum Insured Determined for EAR Insurance?
The sum insured for an EAR policy is generally built around the total value at risk under the project contract, which may include:
- Contract or project value.
- Material costs.
- Labour costs.
- Freight charges.
- Customs duties, where applicable to imported equipment.
- Installation costs.
- Other insured project components as defined in the schedule.
- Escalation cover, where available, to account for cost increases over the project period.
- Additional costs relevant to the specific policy structure.
Notably, there is no single, universal formula for calculating the sum insured that applies across every insurer and project – it is normally built up from the actual project cost components. Getting this wrong matters: an inaccurate sum insured can lead to underinsurance, which may reduce claim settlements proportionately, or over-insurance, which means paying premium on value that isn’t actually at risk.
How to File a Claim Under Engineering All Risk Insurance
Step 1 – Ensure immediate safety. Address any danger to people on-site first.
Step 2 – Take reasonable steps to prevent further damage. Avoid unnecessarily disturbing the loss site while doing so.
Step 3 – Notify the insurer promptly. Put this in writing, referencing the policy number and a description of the incident.
Step 4 – Notify relevant authorities where required. For example, file a police report for theft or malicious damage, or inform the fire department for a fire-related loss.
Step 5 – Preserve damaged property and evidence. Handle this where safe and practical, ahead of the surveyor’s visit.
Step 6 – Photograph and document the damage. Complete this before any clean-up or repair begins.
Step 7 – Prepare the claim documents. This includes the completed claim form and policy details.
Step 8 – Cooperate fully with the surveyor/loss assessor. Provide site access and honest information – a lack of cooperation can leave the loss assessment incomplete.
Step 9 – Provide estimates, invoices, and technical documents supporting the claimed amount.
Step 10 – Loss assessment. The surveyor reviews the cause, extent, and cost of the damage against the policy terms.
Step 11 – Claim decision. The insurer approves, partially approves, or declines the claim based on the assessment.
Step 12 – Settlement, repair, or reinstatement, as applicable, once the claim is resolved.
The actual claim procedure varies by policy and insurer – treat this as a general framework, not a fixed universal process.
Documents Required for an EAR Insurance Claim
- Policy document
- Claim form
- Project contract
- Project schedule
- Site photographs/videos
- Incident report
- Police/fire report, where applicable
- Engineer’s report
- Damage assessment
- Repair/replacement estimates
- Purchase invoices
- Material records
- Bills and supporting documents
- Project accounts, where relevant
- Salvage details
- Any other documents requested by the insurer or surveyor
The exact documents required depend on the type and circumstances of the loss.
What Does a Surveyor Do in an EAR Insurance Claim?
An independent surveyor or loss assessor plays a central technical role in an EAR claim:
- Inspects the site and the physical extent of the damage.
- Assesses the reported cause of loss against what’s observed.
- Also reviews project records relevant to the claim.
- Reviews the policy’s coverage terms and applicable limits.
- Assesses repair or replacement costs.
- Verifies supporting documents submitted by the claimant.
- Evaluates salvage value, where relevant.
- Finally, prepares an assessment report for the insurer.
In short, the surveyor’s role is to assess the loss accurately and impartially. Ultimately, the final claim decision rests with the insurer, based on the survey findings, policy terms, and any additional requirements applicable to the claim.
EAR Claim Example (Illustrative)
Project: Erection of industrial machinery at a manufacturing facility under construction. → Accidental damage: A partially installed machine is damaged during lifting. → Immediate notification: The contractor informs the insurer in writing with the policy number and incident details, without disturbing the site. → Survey: A surveyor visits the site to assess the cause and extent of damage. → Technical assessment: The surveyor determines whether the item is repairable or a total loss. → Repair estimate: The contractor submits a repair cost estimate and supporting invoices. → Policy/excess application: The insurer applies the relevant excess and checks the loss against policy limits. → Settlement: If approved, the claim is settled on the basis of indemnity – repair cost for temporary damage, or depreciated actual value for a total loss. Importantly, this is a hypothetical, illustrative scenario only and does not represent actual claim statistics or a guaranteed outcome.
Engineering All Risk Insurance vs Other Engineering Insurance Policies
| Policy | Main Purpose | Typical Stage / Exposure |
|---|---|---|
| EAR | Covers erection/installation of plant, machinery, and steel structures, plus related third-party liability | Erection, installation, testing, commissioning phase |
| CAR (Contractors’ All Risk) | Covers construction-related risks to civil works and site materials | Civil construction phase |
| Machinery Breakdown | Covers mechanical/electrical breakdown of operational machinery | Post-commissioning, operational phase |
| Electronic Equipment Insurance | Covers physical damage to electronic equipment and systems | Operational phase, sometimes during installation |
| Contractor’s Plant & Machinery | Covers a contractor’s own construction equipment (cranes, excavators, etc.) | Throughout the contractor’s use of the equipment |
No single policy automatically replaces another – a large project often needs more than one of these, matched to the specific phase and asset type involved.
EAR vs CAR Insurance: What Is the Difference?
- EAR is commonly associated with erection and installation risks – plant, machinery, and steel structures being assembled or installed.
- CAR (Contractors’ All Risk) is commonly associated with construction risks – civil works such as buildings, roads, and other structures being built.
- Many real-world projects involve overlapping activities – a factory project, for example, may combine civil construction (CAR territory) with machinery erection (EAR territory).
- The appropriate policy, or combination of policies, depends on the specific project scope and how the insurer structures its underwriting for that project.
Overall, this is not always a clean, universal split – complex projects frequently need both perspectives covered, and the right structure should be confirmed with the insurer or broker for the specific project.
10 Common EAR Insurance Mistakes
- Underestimating the project’s true value at risk.
- Getting the project duration wrong when setting the policy period.
- Not declaring the full project scope accurately.
- Ignoring site-specific risks (geology, weather, security).
- Choosing an excess that doesn’t match the project’s cash-reserve capacity.
- Assuming “all risk” means “everything is covered.”
- Not reading the exclusions carefully before purchase.
- Failing to document project assets and their values properly.
- Delaying claim notification after a loss occurs.
- Not reviewing coverage when the project scope changes midway.
How to Choose the Right Engineering All Risk Insurance Policy
- Define the project precisely – scope, location, and timeline.
- Identify all project stakeholders who need insurable interest recognised.
- Determine the project’s total value at risk.
- Identify the construction and erection risks specific to the site.
- Review exactly what the policy covers.
- Check the exclusions carefully.
- Review the deductible/excess structure.
- Check which extensions are available and relevant.
- Confirm the project duration matches the intended policy period.
- Check geographic and site limits in the policy.
- Review claim conditions and documentation requirements.
- Compare quotes across suitable insurers.
- Read the full policy wording before purchase.
Engineering All Risk Insurance Buying Checklist
- Project scope identified
- Project value calculated
- Project duration confirmed
- Insured parties identified
- Site/location identified
- Major risks assessed
- Coverage reviewed
- Exclusions reviewed
- Excess reviewed
- Extensions reviewed
- Third-party liability requirements reviewed
- Documentation requirements understood
- Claim process understood
- Sum insured reviewed
- Policy wording reviewed
When Might EAR Insurance Not Be the Right Policy?
EAR is not designed to address every project-related exposure. Depending on the situation, separate or complementary insurance may be needed for:
- Operational machinery risks once the project has moved past erection into ongoing operation (Machinery Breakdown).
- Electronic equipment risk, which may need dedicated cover.
- Business interruption, which EAR does not automatically include.
- Professional liability, relevant to architects, engineers, and consultants involved in the project.
- Marine transit of materials or equipment before they reach the site.
- Existing surrounding property, which may need separate property cover.
- Third-party liability, depending on whether this was built into the EAR structure or needs a standalone policy.
In other words, this doesn’t mean EAR is unnecessary – it means insurance needs should be matched to actual risk exposure across the full project, not assumed to be covered by one policy alone.
Benefits of Engineering All Risk Insurance
- Broad project risk protection across the erection and construction phase.
- Financial protection against covered accidental damage to contract works and machinery.
- Support for project continuity when a covered loss occurs.
- Protection of project investment made by owners, contractors, and financiers.
- Risk transfer away from any single party bearing the full financial impact of an accident.
- Better financial planning, since project risk is budgeted through a known premium rather than an open-ended exposure.
- Coverage tailored to project characteristics, rather than a generic property form.
Essentially, EAR insurance is a risk-transfer tool, not a guarantee against project failure or delay.
What Engineering All Risk Insurance Does Not Do
EAR insurance does not:
- Cover every possible risk a project might face.
- Eliminate project risk itself.
- Replace sound engineering controls and site safety practices.
- Automatically cover business interruption.
- Automatically cover every form of third-party liability.
- Eliminate the deductible/excess on claims.
- Guarantee that every claim will be settled in full.
Overall, understanding these limits helps set realistic expectations before relying on the policy in a real loss situation.
Frequently Asked Questions
Q) What is Engineering All Risk Insurance?
A) In short, EAR Insurance is a project-based policy that covers accidental physical loss or damage during the erection, installation, or construction of plant, machinery, and steel structures, subject to the policy’s terms and exclusions.
Q) What does Engineering All Risk Insurance cover?
A) Depending on the policy, it may cover contract works, materials at the site, machinery and equipment, temporary works, and certain natural and accidental perils, plus related third-party liability.
Q) What is not covered under Engineering All Risk Insurance?
A) Common exclusions include faulty design, defective material or workmanship, wear and tear, consequential loss, and war or nuclear risks, among others.
Q) Who can purchase Engineering All Risk Insurance?
A) Parties with an insurable interest in the project – including owners, general contractors, subcontractors, and in some cases, suppliers or manufacturers – can typically purchase or be named on an EAR policy.
Q) What projects need EAR Insurance?
A) Projects with meaningful erection or installation risk, such as manufacturing plants, power projects, infrastructure works, and machinery installation, commonly use EAR insurance.
Q) How is EAR Insurance premium calculated?
A) Premium reflects project value, duration, construction type, location, machinery involved, and risk-management practices, underwritten individually by each insurer.
Q) How can I reduce EAR Insurance premium?
A) Risk assessment, safety procedures, qualified contractors, security measures, and an appropriately chosen deductible can all help manage premium, without cutting essential coverage.
Q) What is excess in EAR Insurance?
A) Excess is the minimum share of a loss the insured retains before the insurer pays the rest, applied to discourage small claims and encourage prudent risk management.
Q) Does a higher excess reduce the premium?
A) Generally, yes – a higher excess can lower the premium, but it increases what the insured pays out of pocket at claim time.
Q) What is indemnity in Engineering All Risk Insurance?
A) Essentially, indemnity means restoring the insured to their financial position before the loss – typically repair cost for temporary damage, or depreciated actual value for a total loss.
Q) How do I file an EAR Insurance claim?
A) Notify the insurer promptly, preserve the damage site, involve relevant authorities if needed, document the loss, cooperate with the surveyor, and submit supporting documentation.
Q) What documents are required for an EAR Insurance claim?
A) Typically the policy document, claim form, project contract, site photographs, damage assessment, and repair estimates, among others depending on the loss.
Q) Does EAR Insurance cover fire?
A) Fire is commonly a named peril under EAR policies, subject to the specific policy wording.
Q) Does EAR Insurance cover flood?
A) Flood cover often depends on the specific policy and may require an extension in some forms.
Q) Does EAR Insurance cover defective workmanship?
A) No – defective material and bad workmanship are typically excluded, though resulting accidental damage caused by such a defect may be treated differently depending on the policy.
Q) What is the difference between EAR and CAR Insurance?
A) EAR is commonly associated with erection and installation risk, while CAR is commonly associated with civil construction risk – though many projects need both.
Q) Does EAR Insurance cover machinery?
A) Yes, machinery and equipment involved in the insured project’s erection or installation is typically a core part of EAR coverage.
Q) Does EAR Insurance cover third-party liability?
A) Many EAR policies include or offer an extension for liability arising from third-party bodily injury or property damage connected to the insured project.
Q) How is the sum insured determined?
A) It is generally built from the project’s contract value, materials, labour, freight, and other insured cost components, rather than a single universal formula.
Q) Does EAR Insurance cover business interruption?
A) Not automatically – business interruption, including delay in start-up, is typically a separate, optional extension rather than a standard inclusion.