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Erection All Risk Insurance

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




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


Erection All Risk

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

Erection All Risk


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

Erection All Risk

Period of cover Erection period Testing period according to the contract requirement - 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

Insured Period Taken into use






Commencement of Works

Provisional Acceptance Certificate

Final Acceptance

Erection All Risk

Sum insured

Completely erected value of the property inclusive of


Customs duty
Erection cost

Erection All Risk


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 Insureds Contribution Deductible Wilful Act or Wilful Negligence of the Insured Cessation of Work

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, drawings, cash, cheques etc,.

Consequential Loss

Erection All Risk

Add-on covers

Third party liability

Cross liability Cost of removal of debris, Express freight,overtime charges,

Air freight,
Custom duty Escalation Owners surrounding property Storage risk at Fabricators Premises

Project Insurance

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 Principals 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


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. Mfging. Faults Erection Errors

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