Difference between Construction All Risks and Erection All Risks Insurance

Construction All Risks (CAR) and Erection All Risks (EAR) policies provide important protection for inherently hazardous construction work. Although CAR and EAR insurance policies are often considered to be interchangeable, there are significant differences between them.

Construction All Risk (CAR) Insurance helps to prevent a disruption to your business and a delay in a project moving forward. CAR offers the ever-important flexibility for lengthy construction projects. CAR insurance provides coverage for contract materials and works, as well as contractors’ plant and equipment, project delays, non-negligent liabilities and public liabilities.

CAR policy provides insurance protection for:

•   Delay in start-up

•   Third party liability

•   Maintenance coverage

•   Professional fees

•   Expediting expenses

EAR policies are designed to cover the risk of loss arising out of the erection and installation of machinery, plant, and steel structures, including physical damage to the contract works, equipment, and machinery, and liability for third-party bodily injury or property damage arising out these operations.
EAR policy provides insurance protection for:

•   Erection and installation of plant machinery during the construction period

•  Machinery from the commencement of loading for dispatch to site (including transit and incidental storage)

•   Defective design and machinery breakdown during testing and commissioning

•   Free issue materials where they are included in the declared values.

​EXCLUSIONS

•     War and nuclear perils

•     Normal wear and tear, gradual deterioration etc.

•     Damage due to faulty design, defective materials, bad workmanship, etc.

•     Consequential loss like loss of revenue, penalty for delay etc.

•     Inventory losses

•     Wilful negligence,

•     loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidence of debt, notes, securities cheques, packing materials such as cases, boxes, crates

All Risks (with certain exceptions) involved during storage, assembly, erection/construction, testing against:-

•     Fire, lightning, explosion/implosion, aircraft damage,

•     Flood, storm, landslide,

•     Theft, burglary, Riots Strikes and Malicious Damage,

•     Negligence, lack of skill, collision, impact, dropping,etc.

•     Electrical/Mechanical breakdown during installation or testing

By paying additional premium policy can be extended to cover additional perils/expenses which are mentioned below:

•     Earthquake

•     Terrorism

•     Clearance and removal of debris

•     Third party liability cover

•     Surrounding property of the insured

•     Escalation provision

•     Express freight, holiday and overtime rates of the wages -

•     Air freight

•     Additional custom duty

•     Construction machinery plants and equipment

•     Maintenance visits cover and extended maintenance cover

​Differences between CAR & EAR
Traditionally, CAR coverage provides protection for construction or contractor all risks and is used mainly for the movement of dirt and concrete building work. CAR is more suitable for civil works such as buildings, roads, bridges, and docks.

 

Meanwhile, EAR coverage is applied to the use of installing machinery and equipment. EAR is more suitable for engineering facilities and other construction projects involving erections and installations. For example, EAR insurance policies provide coverage for the construction of power plants, gas processing facilities and others.

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