Erection All Risks policy (EAR) offers financial protection to principal and contractors and also to manufacturers and suppliers erecting Plant & Machinery, etc.
Scope of cover
This policy provides a comprehensive cover associated with storage, assembly/erection and testing of Plant and Machinery including all perils, unless specifically excluded. The cover commences from the date of arrival of first consignment at site and terminates on the date of expiry as per policy or on completion of Erection and Trial run, whichever is earlier. In the event of non-completion of the project within the policy period, cover may be extended for such further time as may be required by paying additional Premium.
Losses arising out of the following, are covered:
Fire, lightning, explosion, aircraft and impact damage
Riot and Strike and Malicious Damage
Flood, Inundation, Storm etc. Earthquake, Landslid, Rock-slide and Subsidence
Theft, Burglary,
Faults in Erection
Negligence, lack of skill
Short circuiting, Arcing, Excess Voltage
Excess Pressure or vacuum, tearing apart on account of centrifugal forces.
Collision, impact, dropping, falling and similar accidents at site
Add on covers available
Owners’ Surrounding Property
Removal of Debris
Additional Customs Duty
Air-Freight
Express freight, Overtime charges, Holiday wages etc.
Contractors’ Plant & Machinery (upto Rs.25 lacs)
Third Party Liability(with/without Cross liability)
Sum Insured
This should reflect the completely erected value of Plant and Machinery and include
Cost
Freight & other handling charges
Customs Duty/Excise Duty
Taxes
Erection Cost
Foundation for Plant & Machinery
Second Hand Machinery
In case of second hand plant and machinery, the sum insured should reflect the market value or the cost for which they are purchased. Adjustment of sum insured is however allowed for Customs Duty, Freight, Erection cost and incidentals.
If there is any inadequacy of sum insured, claims will be subject to Condition of Average.
Premium: Payment of installments is extended where the period of insurance exceeds 12 months.
Inventory Losses, Normal wear and tear, gradual deterioration due to atmospheric condition or otherwise, rust, scratching of painted or polished surface or breakage of glass.
Loss or damage due to faulty design, defective material or casting
War and warlike operations.
Nuclear reaction, nuclear radiation or radioactive contamination.
Willful act or negligence of Insured.
Consequential Losses of any kind or description such as losses due to penalty, delay, lack of performance, loss of contract
Compulsory Excess
The policy is subject to a compulsory excess. It depends on the type of project to be erected.
There are 3 types of excess, namely:
1.Normal Period
2.Testing Period.
3..Excess for claims arising out of Major Perils/ Acts of God .Excess should be applied on the net claim amount after adjusting for salvage, depreciation and Under Insurance
Basis of Claim
Repairable damages - cost of repairs necessary to restore the property to the original condition immediately before loss, less salvage Under Insurance and excess.
Total Loss - Actual value of the property immediately before loss, less salvage Under Insurance and excess.
Reinstatement of Sum Insured - Upon settlement of a claim, the sum insured will stand reduced to that extent and needs to be reinstated by paying additional Premium to avoid Under Insurance factor for future claim that may arise.