Erection All Risks (EAR) Policy
Consider the example of an erection of electrical equipment in a sugar factory. It may involve the erection of several industrial sugarcane crushers costing Rs. 50 lakhs each.
Electric motors and pumps have to be erected in a large industrial complex.
The Erection All Risks Policy is a comprehensive insurance, which provides complete protection against all types of risks associated with erection, testing, commissioning of machinery, plant, and equipment during the constructional stage. This is concerned with the erection of electrical plant and machinery and equipment and structures involving no or very little civil engineering work.
The EAR policy is also known as Storage-cum-Erection (SCE) policy.
Insurance is on ‘all-risks’ basis and in particular includes:
- Fire, lightning, explosion, aircraft damage
- Riot, strike, malicious acts
- Flood, inundation, storm, cyclone and allied perils
- Landslide, subsidence and rockslide
- Burglary and theft
- Faults in erection
- Human errors, negligence
- Short circuiting, arcing, excess voltage
- Electrical and mechanical breakdown
- Collapse, damage due to foreign objects, impact damages
- Any other sudden, unforeseen, accidental damages not explicitly excluded
Cover can be extended to include up to a limit chosen by you on the following on payment of additional premium.
- Third party liability
- Cross liability
- Cost of removal of debris
- Express freight, overtime charges
- Air freight
- Additional customs duty
- Owner’s surrounding property
- Storage risk at fabricator’s premises
- Maintenance cover-visits, extended maintenance
- War invasion
- Nuclear reaction, nuclear radiation or radioactive contamination
- Insured’s contribution – Deductible
- Willful Act or Willful negligence of the insured
- Cessation of work
- Defective material or bad workmanship
- Wear-tear, corrosion, oxidation, deterioration
- Breakage of glass
- Disappearance or shortage (Inventory losses)
- Design defects
- Loss of files, drawings, cash, cheques etc
- Consequential loss
The sum insured for the insurance should not be less than the completely erected value of the property inclusive of freight, customs duty, and erection cost.
In other words, the insurance should be for the contract price.
It is standard to apply the excess to claims as neither the client nor the insurer wishes to be troubled with handling small losses.