Erection All Risks (EAR) insurance offers protection to principal and contractors and also to manufacturers and suppliers erecting machinery and plant etc. against financial loss due to any sudden fortuitous and unforeseen causes resulting in loss or damage to the property insured at the project site whilst being stored, erected, tested and commissioned.
This policy is suitable for all types of civil engineering construction works ranging from small buildings to massive dams as they are susceptible to damage by a variety of external and internal causes during the course of construction and erection of plant and machinery respectively.
The policy can be extended to cover the following on payment of additional premium :
Add on Covers - Free of Cost for Projects more than 100 Cr.
In a erection policy for Transmission line project there was theft of huge amount of nuts, bolts, copper wire and other metal items. There was no sign of entry and exit and even the client was not able explain how it was possible for the thieves to take away the metal items weighing in thousands of Kilograms.
Losses that arise due to shortage and unexplained disappearance, evident at the time of taking the inventory are not payable under the policy.
Physical stock should be verified from time to time and an appropriate inventory should be made to exercise control over stored items.
Client was advised to take physical stock on regular basis so as to reduce the unexplained loss of Inventory.
Loss arising due to Faulty design was not payable under the policy taken.
Faulty design or design defect is a risk normally occurs in construction and erection. Coverage of risk vary insurer to insurer. If it is not covered in the basic policy, the add-on should be opted.
Design defect need to be added in the Policy.
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