Engineering All-Risk Insurance (EAR Insurance) has been made in relation to projects for construction. The policies of the EAR have been designed in such a way that it covers the risk of loss attributable to the installation and erection of plant and steel structures, equipment, and machinery. It also covers the liability of bodily injury to third parties and damage to property caused while undergoing the operations stated above.
Optional coverage can be the coverage for start-up delay costs.
The parties which are covered are the following:
- Subcontractors
- General contractor
- Suppliers and manufacturers of equipment involved in the operations (in some cases only)
Also called Erection All Risks, the Engineering All Risk Insurance is mainly contracted for these types of projects:
- Manufacturing facilities
- Fabrication facilities
- Power plants
- Water and wastewater treatment facilities
- Erection of signal towers for telecommunication centers
An Engineering All-Risk Insurance may cover the following: Riot, strike, malicious act, Fire, lightning, explosion, aircraft damage, 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 objects, impact damages and any other sudden, unforeseen, accidental damages not explicitly excluded.
Read more: Who can purchase Engineering All Risk Insurance?
An Engineering All-Risk Insurance may exclude the following: Loss or damage due to faulty design, defective material of casting and/or bad workmanship, Manufacturing defects, Loss or damage due to wilful act or wilful negligence, Consequential loss, 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 and also Inventory losses.
Case: 1
Jayant Sharma is a contractor for a new school coming up in Pune. He has been advised by the material suppliers to buy an engineering all-risk policy to insure his construction work. He earlier had thought that the policy was designed for mechanical equipment also but as explained by the material supplier, the policy is useful as it covers various risks and damages that he may expose in his current project.
Since Jayant’s firm is responsible for the installation of various heavy and technical equipment at the institute, the insurance policy will act as a safety net in case any misfortune strikes.
Case: 2
Jeevan Shukla runs a small and medium size clothing business and has employed 60 employees. Inspired by the government’s ‘Make in India’ initiative, he has decided to expand his business to other states in India as well. Initially, he decides to capture the market of Pune and sends a team of his engineers to the city.
As now Jeevan would require installing plant & machinery at a new location, it is necessary for him to buy an engineering all-risk insurance plan. The policy will come in handy as it will cover the risk that may arise from the installation of machinery. Further, it will offer coverage against both natural and man-made calamities like a riot, wilful negligence, burglary, theft, flood, lightning, storm, etc.
Read More: What is not covered under Engineering All Risk Insurance?
Case: 3
Korean Engineering Pvt. Ltd. (India) is one of the subsidiary companies of Korean Engineering Pvt. Ltd, Korea. Since 2013, the company has completed various civil engineering projects in India.
The company understands its responsibilities as elaborated by one of its project heads here in India,
“We adopt global safety norms. We have a team of quality auditors who monitor our construction sites and take all necessary steps to ensure complete safety. Also, we have bought an engineering all-risk insurance policy for all our engineering projects. Though we take every step to ensure complete safety; accidents can still arise. In addition to covering all types of risks involved in the erection of machinery, the policy also covers third-party injury arising in connection with the engineering business.”
