Erection All Risks

Erection All Risks (EAR) insurance is a specialized type of engineering insurance designed to cover the installation and commissioning of machinery, plant, and steel structures. It’s especially relevant for contractors, engineers, and project owners involved in industrial or infrastructure projects.

Breakdown of what is covered under Erection All Risk Cover

Risks Covered

A. Material Damage Section
Loss or damage to machinery, plant, and equipment during:
  • Unloading
  • Storage at site
  • Erection/installation
  • Testing and commissioning
  • Common Perils Covered under this section are: Fire, lightning, explosion, flood, windstorm, earthquake, theft, vandalism, faulty erection, negligence, and more
B. Third-Party Liability Section
Covers legal liability for:
  • Bodily injury or property damage to third parties caused by erection activities.
Testing and Commissioning Risks
  • Includes damage during trial runs, load testing, and performance testing.
Common Extensions
EAR policies can be customised with several optional extensions, such as:
  • Maintenance Cover: Extends protection into the maintenance period post-completion.
  • Surrounding Property: Covers accidental damage to property adjacent to the project site.
  • Debris Removal: Costs for clearing debris after an insured event.
  • Escalation Clause: Adjusts the sum insured to account for inflation or cost overruns.
  • Professional Fees: Covers architects’, engineers’, or consultants’ fees for reinstatement.
  • Transit Cover: Protection for materials and equipment while in transit to the site.
  • Offsite Storage: Covers materials stored away from the project site.
  • Loss of Profit/Delay in Start-Up (DSU): Covers financial losses due to project delays caused by insured events.
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Key Exclusions
While EAR insurance is broad, it does not cover everything. Common exclusions include:

  • Normal wear and tear

  • Defective design or materials (unless resulting damage is covered)

  • War, terrorism, and nuclear risks

  • Willful negligence or misconduct

  • Losses due to faulty workmanship

  • Consequential losses (unless DSU is added)

  • Penalties or liquidated damages

  • Loss or damage discovered only during inventory checks

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