Erection All Risk Insurance
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Erection All Risk Insurance

The erection all risk insurance covers loss or damage to projects involving the erection/installation of plant, machinery, and equipment, ranging from the erection of a single machine to the construction of a big power plant. It safeguards a contractor’s or an employer’s contract works, construction plant and equipment, or machinery from physical loss or damage. It also covers damage to third-party property as well as bodily injury to third parties.

This insurance covers a wide range of projects, including huge ones like the construction of thermal power plants, fertiliser plants, oil refineries, or the installation of entire manufacturing facilities, all of which pose a variety of risks to both the contractors and the principal.

Importance of Erection all Risk Insurance

The lengthy process of establishing a whole building structure necessitates patience and a great deal of effort. Aside from the building, a construction plant’s equipment and machinery must be set up, tested, and installed in order for it to function properly.

As a result, there are various dangers and threats associated with the process, which includes several processes, equipment, and people working to develop a complete building, structure, or facility. As a result, you’ll need an Erection All Risk coverage to safeguard you and your assets from the beginning to the end of the construction process.

Features and Benefits of Erection all Risk Insurance

The lengthy process of establishing a whole building structure necessitates patience and a great deal of effort. Aside from the building, a construction plant’s equipment and machinery must be set up, tested, and installed in order for it to function properly.

As a result, there are various dangers and threats associated with the process, which includes several processes, equipment, and people working to develop a complete building, structure, or facility. As a result, you’ll need an Erection All Risk coverage to safeguard you and your assets from the beginning to the end of the construction process.

Material Damage & Cover

  • The erection all risk insurance policy protects the project site’s machinery, equipment, civil work, and other materials. Covers damage to the principal’s adjacent property.
  • Fire, lightning, burglary, explosions, and natural calamities such as earthquakes and floods are all covered under the policy.
  • Additional to the material damage cost, EAR policy also covers custom duty, freight, wages and other related expenses.

Covers Third Party Liability

  • Legal liability for damage to adjacent property or property held in trust or under the insured’s custody is covered by project insurance. Liability for bodily injury to a third party, whether deadly or non-fatal, is also covered.

  • Cross-liability extensions are allowed, allowing a claim by a co-insured to be disputed as well.

  • The coverage covers legal costs such as lawyer’s fees, court compensation, settlement costs, and other case-related charges.

Wider Extension Coverage

  • Erection insurance provides a broader range of add-on coverage for the under-erection project, allowing for more comprehensive coverage. As essential add-ons, it includes a testing period and a longer maintenance duration.

  • Design Defect, Escalation Cost, Debris Removal, and Expediting Expenses are some of the other significant extensions available.

  • Clauses include 72-hour coverage, co-insurance, waiver of subrogation, 50:50 split, and public authority clause are all covered to ensure total coverage.

Inclusions

Material Damage

During the following phases, coverage is provided for any unforeseen and sudden damage to the covered property:

  • Storage

  • Erection

  • Testing

  • Commissioning

  • Upon any incident giving rise to an admissible claim under the policy, reimbursement of the expense of clearing and removing debris.

Covers damage to the covered property caused by an explosion or other direct cause:

  • An act of terrorism perpetrated on behalf of or in connection with any organisation by a person or persons acting on behalf of or in connection with that organisation.

  • Any lawfully constituted authority’s conduct in suppressing or seeking to suppress any such act of terrorism, or in limiting the repercussions of such an act of terrorism.

  • Third-Party Liability

This section covers:

  • Accidental loss or damage to other people’s property, including property held in trust or under the insured’s custody for which he is accountable. This would rule out any such attribute in relation to the erection.

  • Legal liability (except contract liability) for fatal or non-fatal injury to anyone other than the insured’s own workers, employees of other firms involved in any other erection activity, or members of the insured’s family, resulting directly or entirely from the erection of any insured property.

  • Includes coverage for any litigation costs and expenditures recovered by any claimant from the insured, as well as all costs and expenses incurred with Reliance General Insurance’s written agreement.

Exclusions

This policy does not cover the following:

  • Deficiencies in design, material, or casting, as well as poor craftsmanship, can result in loss or damage.

  • Cost of rectification or correction of any erection-related fault that does not result in physical harm.

  • Files, drawings, accounts, and bills have been damaged.

  • Scratching of painted or polished surfaces, glass breakage, and cosmetic flaws.

  • War and nuclear dangers, as well as the resulting losses.

  • Willful act/negligence, loss identified during inventory, and regular wear and tear are all factors to consider.

  • Penalties for failure to meet contractual obligations and operational flaws.

  • After a claim, the costs of any alterations, additions, and/or enhancements.

  • Third-party liability, contractual liabilities, and vehicle accidents on the road, on the sea, and in the air.

Claim Process For Erection All Risk Insurance Policy

In the event of an occurrence that could result in a claim under this Policy, the Insured shall:

  • Immediately notify the Company in writing, describing the type and scope of the loss or damage;

  • Ensure that the loss or damage is as small as possible;

  • Preserving the afflicted items and making them available for inspection by a Company representative or surveyor;

  • Provide the Company with any and all information and documentation that it may require;

  • In the event of a loss or damage as a result of theft or burglary, notify the police authorities.

To secure claim settlement, make sure you fill out the claim form correctly, as erroneous information presented throughout the claim process is a leading cause of claim denial. It’s also critical to notify the insurance company as soon as the claim is made so that a surveyor may be assigned in a timely manner. Furthermore, you must ensure that any claim paperwork requested by the insurance company are submitted on time.

Frequently Asked Questions

1. What are the add-ons available under erection insurance?

Under the erection of all risk insurance, a wide range of add-ons are available. Cross liability, express freight, air freight, and maintenance coverage are just a few of the important add-ons. In addition, the policy covers the expense of debris cleanup and professional fees. The coverage also covers the testing duration, design problem, and expediting costs.

2. Who should take an erection all risk insurance policy?

The legislation is especially significant for the development of industrial plants and machinery, windmill farms, solar energy farms, and other similar projects when setting up a new apparatus implies specific risks that can have catastrophic financial effects. In general, contractors, subcontractors, and the project’s principle adopt this insurance to cover the full erection process at a site for a set amount of time.

3. What is covered under erection all risk insurance?

Erection all-risk insurance covers the erection or installation of machinery, plant, and equipment, from a single machine to a big manufacturing facility. The policy protects the company from risks such as fire, lightning, and natural disasters that could cause physical loss or damage to contract work. The policy also covers legal liability claims that arise due to third party bodily injury and property damage.

4. What are the documents required for filing a claim under the erection all risk policy?

The common documents required for filing the claim are:

  • Duly filled claim form

  • Damage report on the extent of damage

  • Letter of award and bill of quantity

  • Purchase or delivery order details

  • The estimated cost of repair or lost product

In addition to these documents, the insurer can ask for some additional documents based on the type of claim.

5. How to ensure claims are paid under engineering insurance in India?

To secure claim settlement, make sure you fill out the claim form correctly, as erroneous information presented throughout the claim process is a leading cause of claim denial. It’s also critical to notify the insurance company as soon as the claim is made so that a surveyor may be assigned in a timely manner.