Erection All Risk Insurance

Project Insurance
Insured Parties

Any one or more of the following

Principal
Contractor

Employer
Sub-contractor

Manufacturer

&

Insurer

Erection All Risk

Basic concept
Comprehensive cover against all the risk
involved in the
Storage
Erection
Testing and
Commissioning
of machinery & plant pertaining to various
Industries

Erection All Risk

Cover
Sudden and unforeseen loss or damage due to

Fire, lightning, explosion, aircraft damage

Riot, strike, malicious act
Flood, inundation, storm, cyclone and allied perils
Landslide, subsidence and rockslide
Burglary and theft
Faults in erection
Human errors, negligence, lack of skill
Short circuiting, arcing, excess voltage
Collapse, damage due to foreign objects, impact damages
Earthquake (optional)
Terrorism (optional)
Any other sudden, unforeseen damages not explicitly
excluded

Erection All Risk

Interest
Joint interest:
The policy can be taken jointly by
the owner / principal covering the
interests of all other parties
Interest of Financial institution:
Insured must specify clearly if
interest of Financial Institution or
Bank is required to be covered

Erection All Risk

Period of cover
Erection period

according to the contract

requirement

Testing period - Normally 1 month but may

be more than a month
depending on actual
requirement
Maintenance period begins from the day testing
of the plant is declared
completed upto the period
based on requirement

Erection All Risk

Insured Period
Taken into use
Works

Testing

EAR

Commencement
of Works

Maintenance

Operational

Provisional Acceptance
Certificate

Final Acceptance

Erection All Risk

Sum insured
Completely erected value of the property
inclusive of
Freights
Customs duty
Erection cost

Erection All Risk

Exclusion
Types:
General Market Exclusions
Trade Risks
Risks more exactly the Subject matter
of Other Insurance

Erection All Risk

General Market Exclusions
War Invasion Riot Strike Civil
Commotion etc
Nuclear Reaction Nuclear Radiation
or Radioactive

Contamination

Insureds Contribution Deductible

Wilful Act or Wilful Negligence of
the Insured
Cessation of Work

Erection All Risk

Trade risk
Defective Material or Bad workmanship
Wear Tear Corrosion Oxidation Deterioration
Normal Maintenance or Making Good
Disappearance or Shortage (Inventory Losses)
Risks more exactly the Subject matter of Other Insurance
Design Defects
Loss of files, drawings, cash, cheques etc,.
Consequential Loss

Erection All Risk

Add-on covers
Third party liability
Cross liability
Cost of removal of debris,
Express freight,overtime charges,
Air freight,
Custom duty
Escalation
Owners surrounding property
Storage risk at Fabricators Premises

Project Insurance
IMPORTANT ADD-ONS:
Third Party Liability

Third-party exposure to nearby structures by excavation

and foundation work and to traffic

Project Insurance
Add-on covers
Removal of Debris

The cost of debris removal

following an accident to the
Extent that it is necessary
Before repairs may be put
In hand

Project Insurance
Add-on covers
Surrounding Property

The integration of an old

hotel into the new project
represented a high exposure
of the Principals existing property

Erection All Risk

Physical Hazards
Pre-erection and storage:
Fire
Theft
Water Damage
AOG Perils
Material Handling Equipments
Improper Storage
Acts of god

Erection All Risk

Physical Hazards
Construction & erection:
Working at Heights
Heavy Lifts
Handling of Over Dimensioned Items & Electrical Equipments
Civil Construction Requirements
Fire & AOG Perils
Theft

Erection All Risk

Physical Hazards
Testing & commissioning:
Failure of Controls & Safety Device
Chemical Leakages
Controls & Instrument Failure
Failure of Material under Pressure
Human Error & Negligence
Explosion.
Erection Errors

Erection All Risk

Basis of settlement
Partial loss:
The cost of repairs necessary to restore the items to their
condition immediately before the occurrence of the damage
less salvage, OR
Total loss:

The actual value of the items immediately before the

occurrence of the loss less salvage;
However, only to the extent the costs claimed has to be borne
by the Insured and to the extent they are included in the
Sum Insured