Engineering Insurance

Project Insurances:

EAR    Major Portion of contract relates to Machinery/Equipment and its erection
CAR    Major Portion of project relates to civil works
TPL    Usually third party liabilities related to/arising from the project work are also covered with limits specified

A. Contractors All Risks (CAR) Insurance:

The basic concept is to offer comprehensive and adequate protection  against loss or damage in respect of contract works, construction plant and equipment and or construction machinery, as well as against third party claims in respect of property damage or bodily injury arising in connection with the execution of a building contract.
A CAR Policy may be concluded by the Principal or by the Contractors engaged in a project, including all sub-contractors. CAR Insurance provides an “All Risks’ cover – every hazard is covered which is not specifically excluded under the insurance policy. This means that almost any sudden and unforeseen loss or damage occurring during the period of insurance to the property insured on the building site will be indemnified.

The most important causes of losses indemnifiable under CAR insurance are:

• Fire, lighting, explosion
• Flood, inundation
• Windstorm of any kind
• Earthquake,
• Theft and burglary
• Bad workmanship, lack of skill, negligence
• Malicious acts or human error

The cover is subject only to a few exclusions which are applied internationally and are common to the insurance industry. These exclusions are named in the policy.
In addition, it is possible to extend the period of cover to include:

• Maintenance Visits Cover – The cover is limited to loss or damage caused by the insured in the course of the operations carried out for the purpose of complying with the obligations under the maintenance provisions of the contract
• Extended Maintenance Cover – In addition to above, this cover also includes loss or damage caused during the construction period
• Third Party Liability under CAR Policy – Covers all the insureds named under the policy against liability directly arising from the works performed on or around the construction site against claims from third parties, which includes ‘surroundings’ of a project site viz: neighboring property, utilities above / below ground, accessibility of the project site by TP personnel exposed to bodily injuries.

B.  Contractors Plant and Machinery (CPM) Insurance

This is an insurance of contractor’s plant and machinery on an annual basis. It covers any loss or damage from any cause whatsoever occurring at work, at rest or during maintenance operations and is not limited to a specific construction site. The CPE extension under CAR cover only apply at the site of insured project and have no validity either outside the site, enroute to it or in repair workshops.

C.  Erection All Risks (EAR) Insurance

This branch of Engineering Insurance offers comprehensive and adequate protection against all the risks involved in the erection of machinery, plant and steel structures of any kind as well as third party claims in respect of property damage or bodily injury arising in connection with the execution of an erection project.
Insured under an EAR Policy are:

• The manufacturer or supplier of machinery or plant, he carries out the erection work or is responsible for it or
• The firm commissioned with erection work, or
• The purchaser of the machinery or plant to be erected.

EAR Insurance provides a very wide cover. Almost any sudden and unforeseen loss or damage occurring to the property insured on the erection site during the period of insurance will be indemnified. Normal the insurer will be liable for loss or damage due to the causes:

• Fire, lighting, explosion
• Flood, inundation
• Windstorm of any kind
• Earthquake,
• Theft and burglary
• Faults in erection
• Negligence, lack of skill, lack of experience, malicious acts
• Short circuiting, arcing, excess voltage
• Excess pressure or vacuum, tearing apart on account of centrifugal forces

Any other sudden and unforeseen event such as loss or damage due to collapse, foreign objects, on site transport or items to be erected etc..
The cover is subject only to a few exclusions which are applied internationally and are common to the insurance industry. These exclusions are named in the policy.
In addition, it is possible to extend the period of cover to include:

• Maintenance Visits Cover – The cover is limited to loss or damage caused by the insured in the course of the operations carried out for the purpose of complying with the obligations under the maintenance provisions of the contract
• Extended Maintenance Cover – In addition to above, this cover also includes loss or damage caused during the erection period
• Maintenance Guarantee Cover – If the insured is the manufacturer of the machinery or plant to be insured and has also been commissioned with the erection work, the manufacturers liability during the guarantee period, as stipulated in the supply contract, can be included in the insurance to a certain extent in addition to the above mentioned covers however, this type of cover is normally regarded as very hazardous.

Principal Engineering Insurances: