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Erection All Risk Insurance

Project Insurance
Insured Parties
Any one or more of the following Principal Contractor Employer Sub-contractor

&

Insurer

Manufacturer

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 .

explosion. storm.Erection All Risk Cover Sudden and unforeseen loss or damage due to • • • • • • • • • • • • Fire. aircraft damage Riot. unforeseen damages not explicitly excluded . negligence. impact damages Earthquake (optional) Terrorism (optional) Any other sudden. strike. malicious act Flood. cyclone and allied perils Landslide. arcing. excess voltage Collapse. damage due to foreign objects. lightning. subsidence and rockslide Burglary and theft Faults in erection Human errors. lack of skill Short circuiting. inundation.

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 .

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 Period of cover Erection period Testing period – according to the contract requirement .

Erection All Risk Insured Period Taken into use Works Testing Maintenance EAR Operational Commencement of Works 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 • Insured’s Contribution – Deductible • Wilful Act or Wilful Negligence of the Insured • Cessation of Work .

. drawings. cheques etc.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. • Consequential Loss . cash.

Erection All Risk Add-on covers • Third party liability • Cross liability • Cost of removal of debris.overtime charges. • Air freight. • Express freight. • Custom duty • Escalation • Owner’s surrounding property • Storage risk at Fabricator’s 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 Principal’s existing property .

Project Insurance Refund of Premium For early completion of the project: Subject to : •Period of insurance >= 18 months •Notice for early completion in advance •Claim experience < 60% •Policy period not exceeding the contract period •Minimum period for refund 3 months .

Project Insurance Risk Management •Elimination & minimisation of risks First Step: To identify the risk Evaluate risks inherent of the contract Second Step: Implement a loss prevention and safety programme to minimise these Inherent risks Third Step: The risk would be assigned to various parties involved by contractual agreement .

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 • MBD & Explosion. Faults • Erection Errors . • Mfging.

Erection All Risk Claim procedure • Designated Surveyors • Contact Details of Surveyors • Surveyors response within 24 hours • Interim report • Final report • Settlement based on the survey report • Risk Engineers assistance as and when required .

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 .