Erection All Risk (EAR) Insurance

What is Erection All Risk (EAR) insurance?

Erection All Risk insurance is a project policy that covers machinery, plant and steel structures against accidental loss or damage while they are being erected, tested and commissioned. It also covers the insured's legal liability to third parties arising from the erection work.

EAR is the engineering sibling of Contractors' All Risk insurance. CAR suits projects where civil work dominates. EAR suits projects where the main value lies in machinery and its installation, such as power plants, factories, refineries, lifts and escalators, cooling towers and substations. Both form part of our construction insurance practice.

What EAR insurance covers

Material damage

• The items being erected, including machinery, electrical installations, piping and steel structures.
• Associated civil works, where they form a minor part of the project.
• Accidental damage from fire, explosion, lightning, theft, faulty erection by workers, lifting mishaps and natural perils.
• Damage during the testing period, whether cold testing (no load) or hot testing (under load), for the duration stated in the policy.

Optional extensions

• Construction plant and erection equipment used on site.
• Clearance and removal of debris.
• Existing surrounding property belonging to the principal.
• Escalation of values during the project.
• Express freight and overtime to speed up repairs.
• A maintenance period after handover.

Third-party liability

Legal liability for accidental injury to people who are not employees, and damage to property of others, arising out of the erection work.

What is not covered

• The cost of replacing a part that failed because of its own faulty design, material or casting. Resulting damage to other parts may be covered, depending on the wording.
• Wear and tear, corrosion and gradual deterioration.
• Losses after the testing period ends or after the item is handed over and put into use.
• Used machinery, unless the insurer agrees specifically, often with narrower terms.
• Penalties for delay and consequential losses, which need ALOP cover.
• War, nuclear risks and wilful acts.

Who needs EAR insurance

Manufacturers supplying and installing their own equipment. EPC contractors on power, oil and gas, steel, cement and process plants. Project owners who want one policy protecting all parties. Real estate developers installing lifts, DG sets, HVAC and fire-fighting systems, where the machinery value is significant. Lenders usually expect the project owner to hold EAR or CAR cover until commissioning.

How the sum insured and premium are decided

The sum insured is the full replacement value of the items being erected, including freight, duties and erection costs. The premium reflects:

• The type of plant and how prototype or proven the technology is. Untested designs attract tighter terms.
• The weight and complexity of lifts, and the cranes used.
• The length of the erection and testing periods.
• Site exposure to flood, earthquake and fire.
• The deductibles, which are often higher for testing losses.

Testing is where many serious losses happen. The policy states a fixed testing period, and if commissioning drags on, cover must be extended before it ends.

How MILES helps

• We read the EPC or supply-and-erect contract to confirm who must insure what and from when.
• We compare EAR terms, testing clauses and deductibles across the 16+ insurers we work with.
• We check that transit cover under a marine policy ends where EAR begins, so there is no gap at the site gate.
• We monitor project timelines and arrange extensions before the testing period expires.
• We coordinate surveyors, manufacturers and insurers when a claim arises, with support from our claims team.

How a claim works

1. Stop work on the damaged item, make the area safe and notify the insurer and MILES immediately.
2. Keep damaged parts for inspection. Do not start repairs before the surveyor agrees, except to prevent further loss.
3. Record the event with photos, site logs, erection records and test reports.
4. Share invoices, repair estimates and the manufacturer's report with the surveyor.
5. The surveyor assesses the loss against the policy terms and the insurer settles the claim, less the deductible.

Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.