Engineering all risk insurance policies cover the threats of loss arising out of installation of machinery, plant, and engineering structures, like physical damage to the contract works, tools and machinery, and liability for third-party bodily injury or property damage (PD) happening due to any of these operations. Insurance for delay in start-up costs is typically a voluntary coverage.
Depending on the type of cover taken under the engineering insurance, exclusions will vary. Some most prominent and common ones are as follows:
- Aesthetic defects, Design Defects, Faulty design
- Breakage of Glass
- Cessation of Work
- Consequential Loss
- Damage covered under AMC
- Damage directly occasioned by pressure wave caused by aircraft/other aerial devices
- Defective Material or Bad workmanship
- Derangement not accompanied by damage otherwise covered by this policy
- Disappearance or Shortage (Inventory Losses)
- Electrical /mechanical breakdown
- Equipment undergoing testing
- Faults or defects existing at the time of commencement of insurance, which were/ ought to have been, known by the insured.
- Loss of files, drawings, cash, cheques etc.
- Loss or damage due to explosion of boiler/pressure vessel
- Loss or damage for which manufacturer/ supplier is responsible either by law or contract
- Loss/ damage arising out of overload experiments or tests requiring imposition of abnormal conditions
- Loss/damage to exchangeable tools and operating media
- Normal Maintenance or Making Good
- Nuclear Reaction Nuclear Radiation or Radioactive Contamination
- Plant/machinery working underground
- Total or partial immersion in tidal waters
- Vehicles designed and licensed for general road
- War Invasion
- Whilst in transit
- Wilful Act or Wilful Negligence of the Insured
Click here to know what is covered under engineering all risk insurance?
However, some add-ons can be selected depending upon the policy rules and guidelines.
Case on Engineering All Risk Insurance
Ram Kapoor, a contractor acquired a lucrative project for the manufacturing of shirts. However, unfortunately, due to his negligence could not complete the project on time. While working on one of the machines one of the worker’s irresponsible behavior caused the machinery damage.
He was unable to recover the cost of damage and contractual loss, despite having the engineers all risk insurance. As the insurance policy clearly excluded these perils and loss due to negligence.