Construction All Risk

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Construction business involves various types of risks, ranging from financial, project management risk, environmental risk, and contractual risks to safety and regulatory risks. Considering the high-risk exposure, having various types of construction insurance suitable for the business is important. Specifically, if the business is involved in construction projects that include the erection and installation of machinery, plant, and equipment, the erection all risk insurance is important to a safeguard the business. This article, let us understand how erection all risk insurance is different from other construction insurance. 

What is erection all-risk insurance?

Erection All Risk (EAR) policy is a type of construction insurance that is designed to give protection against the risks associated with the installation, and erection of machinery, plant, or equipment during a construction project. The erection all risk policy coverage includes compensation for physical loss or damage to the insured items during the erection or installation phase. This insurance typically offers financial protection to project owners, contractors, and other parties involved in the construction project.

To understand, let us take an example of a construction project involving the installation of a critical component. An industrial boiler in a manufacturing facility for plant operation. Let us assume that the boiler sustains damage due to unforeseen circumstances during transit. Having erection all risk insurance would cover the damage that occurred during transportation, providing financial assistance for repairs or replacement.

The difference between the erection all-risk insurance and other construction insurance

There are various types of construction insurance available apart from erection all-risk insurance, such as contractor’s all-risk insurance, builder’s risk insurance, and employer’s liability insurance. Let us understand how does erection all-risk insurance policy differs from other construction insurance.


Components Erection all-risk policy Other construction insurance
Scope of coverage Provides coverage for loss and damage arising from risks associated with erection, and installation of equipment, plant, and machinery.  Includes various types such as Contractor’s All Risk (CAR) insurance and builder’s risk insurance coverage, which provides broader coverage. These insurance coverages apply for the entire construction project, including construction machinery, materials, and the completed structure.
Risks Specifically focuses on the risks during the installation and testing of equipment. This can include risks like transit damage, assembly damage, manufacturing defects, handling, and erection-related damages. Offers coverage for a broader range of risks throughout the construction process. This includes risks related to construction materials, machinery, structures, and third-party liabilities.
Applicability Erection all risk insurance is specifically tailored to the construction project’s erection and installation-related risks. Contractors, project owners, engineers, design professionals, investors, manufacturers, logistic providers, etc., typically purchase this. It is common in industries such as manufacturing, infrastructure, and power generation.  These insurance policies provide broader coverage and are hence applicable to a wider range of construction projects. This includes roads, bridges, buildings, and other civil engineering projects. 
Cost The erection all-risk tariffs depends on several factors. This includes project value, type of equipment or machinery, project duration, coverage requirement, location, and more.  The cost for other construction insurance like contractor’s all-risk insurance depends on factors like project location, scope, experience, safety track record, coverage duration, etc. 

Erection all-risk insurance offers tailored coverage to specific risks during a construction project. On the other hand, other construction insurance like contractors’ all-risk insurance policies provides comprehensive coverage for a wide range of risks in the construction industry. It is important for contractors, project owners, and manufacturers to carefully consider their insurance needs. And then buy coverage to have adequate protection against potential risks.


Erection All Risk insurance is important for the successful and secure execution of construction projects. It is crucial for construction professionals to carefully assess the risks associated with their projects and obtain a suitable combination of insurance coverage to ensure comprehensive protection. Seeking expert opinions and advice can help tailor insurance policies to specific project needs.

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