An engineering all-risk (EAR) insurance policy is an ideal purchase for certain businesses. Specifically, such businesses involve some developmental risks that could have devastating financial consequences. For instance, power plants, manufacturing and fabrication set-ups, water and wastewater treatment plants, and telecommunications centers.
Engineering all-risk insurance policy offers coverage at several stages of an engineering project. That is to say, storage, testing, handling, or commissioning at a plant or machinery engineering site. Broadly, the insurance covers loss caused by installing or erecting plants or machinery. Additionally, it also covers liability from injuries to third parties or damage to property during this process.
Typically, general contractors, subcontractors, consulting engineers, architects, and those funding a project buy EAR insurance. However, in some cases, suppliers and manufacturers of machinery also do so.
Case study: EAR policy useful for contractors too
Mr. Bardhan was a contractor. Recently, he won the contract for work on an engineering and management institute coming up in Himachal Pradesh. Although he was keen to start work, his insurance advisor had a word of caution. Along with his materials supplier, the advisor suggested that he insure his project with an EAR policy.
This suggestion surprised Mr. Bardhan. Because he had thought that the policy covered only mechanical equipment. But his advisor explained that the policy would cover all the risks likely to arise under the new contract.
As the insurance advisor pointed out, Mr. Bardhan’s firm was liable for the installation of multiple heavy and technical equipment at the institute. Hence, the policy would help him maintain a financial safety net in case of any mishap.